Expansion of Ethanol Demand: Economic Implications for Indiana Corn Producers

The United States significantly depends on petroleum imports. To reduce this reliance on foreign oil, ethanol production is increasing. Ethanol is a renewable fuel that can be derived from corn. In 2007, total corn acres planted in the United States were a record 92.9 million acres, a 19% increase from 2006. This research analyzed farmers’ perceptions and crop management adjustments in response to increased ethanol demand. A survey was mailed to 2000 Indiana farmers in August 2007. The objectives of the survey were to analyze farmers’ yield experiences from a continuous corn rotation, a corn/soybean rotation, and a corn/corn/soybean rotation plus compare their reported yields to agronomic university research results. Farmer’s responses indicate no statistically significant difference in corn yields between the three rotations, while university research indicates otherwise with lower yields for corn following corn as well as continuous corn relative to a traditional corn/soybean rotation. Respondents with higher gross incomes were responsible for most of the increase in corn acres in 2007. It was further found that mid‐career farmers were more likely to increase corn acres in response to the increased demand. However, educational attainment did not appear to influence acreage adjustments or yields.