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Corn planting soaring in Bulloch

Demand for ethanol behind price boost

    Be prepared for something this area hasn't seen much of in the last several years – field upon field, planted in corn.
    With the price of a 56-pound bushel of dried corn trading at an all-time high, local farmers have decided it is time to grow corn again. Fueled by the demand for ethanol, a corn based alternative fuel, the price for corn has eclipsed $4 dollars a bushel, which is double the price from a year ago.
    Tony Flagg, CEO of First United Ethanol, LLC, an ethanol production plant currently under construction in Mitchell County, Ga., said the demand for agricultural commodities is not just food based any longer.
    "Higher oil prices, have enabled various renewable energy sources to be more cost competitive in the energy marketplace," Flagg said. "This includes ethanol.  The maxim that for every action there is a counteraction is true for the marketplace as well.  In this particular case, the higher oil prices have resulted in higher corn prices as we reintroduce fuel as a demand factor along with food and fiber in the agricultural demand complex."
    First United Ethanol expects its new ethanol production plant to be ready for operation in the fall of 2008. The $170 million facility will be able to produce 100 million gallons of ethanol per year requiring 40 million bushels of dried corn as its raw material.
    "In a typical year the entire state of Georgia raises around 25 million bushels a year, although I am sure the production number will expand greatly this year," Flagg said.
    Local farmers are taking advantage of the record price and demand for corn yielding predictions that corn production could triple this year in Bulloch and surrounding counties compared to years past.
    Wendell Brannen, an owner of Tillman & Deal Farm Supply, said orders for corn seed are at an all time high.
    "Last year we sold enough seed corn to plant approximately 3,800 acres," Brannen said. "This year we have booked enough seed to plant over 11,000 acres. That is a tremendous increase."
    Brannen said the price of corn has created excitement and volatility in the grain market.
    "At over $4 dollars a bushel, corn is selling for more than it ever has," Brannen said. "Farmers are responding to the demand, but they realize mother nature is going to play a major part in whether or not they are going to be successful. With the right amount of rain, we should experience a bumper corn crop this summer."
    Thomas Harper is the owner of Statesboro Grain, a facility which processes and sells locally produced wheat, soybeans, and corn. Harper said all indications point to a huge increase in local corn production this summer, but he is concerned
    "The price of corn has doubled since last August," Harper said. "The wheat crop looks great as well. Honestly, we are expecting a record year for U.S. grain production."
    "The big problem is going to be finding a usage for all of this corn at harvest time," Harper said. "There will clearly be a glut on the market, and buyers are waiting to take advantage of that. Also, just getting the crop moved, assuming all goes well with the growing season, is going to be a major challenge. If you are in the agricultural industry, the one word you better add to your vocabulary this year is 'patience.'
    Flagg said the speed in which the ethanol industry is developing brings its own set of problems for the farmers which are growing corn in an attempt to supply it.
    "The problem that we have in Georgia is that it is all happening too fast," Flagg said. "In this particular case the market price has probably exceeded the market place’s ability to store and deliver the product.  Georgia has not raised any substantial amount of corn in 20 years and we simply do not have the infrastructure to keep up with it."
    "Infrastructure in this case means everything from combines to grain storage bins, to dryers, and possibly even trucks," Flagg said. "In order to build that infrastructure it will probably take at least a couple of years of sustained prices and in the interim it is important that individual farmers be careful in insuring that they in fact have a market delivery mechanism in place."
    Harper said that storage is quickly becoming a major issue.
    "Farm storage is going to be at a premium," Harper said. "Commercial storage is going to be at a premium. We are going to have to have somewhere to put all of this production assuming we get rain at critical points during the growing season."
    Local farmer, Brian Howell, farms and manages more than 5,000 acres in Bulloch, Candler, Evans, and Tattnall Counties. Howell said he has traditionally planted 1,500 acres of corn each year and doesn't plan to increase that amount.
    "I have been growing a good bit of corn the last four or five years," Howell said. "At this point, I can't really chase markets, it would mess up my rotation. But, I have built a lot of storage, and I am very grateful that I did that now."
    "I am selling corn that I have stored from last year for over $4.50 a bushel," Howell said. "The demand is there, and based on what is going on in the ethanol industry, I think it will continue to be there. You just have to be able to store it and sell it throughout the year to maximize your return."

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