A Case Study on the Impact of an Ethanol Plant on Corn Price

Christian Fort and Joe Parcell (jparcell@ksu.edu)

Journal of the ASFMRA, 2006, vol. 2006, 5

Abstract: An increase in corn prices of the local area tend to occur when an ethanol plant begins operation. The objective of this research is to evaluate the impact of a corn processing ethanol plant on corn price levels. Results indicate that farmers in the nine-county area surrounding Macon, Missouri have seen increased farm revenues to $4.12 million annually, or a weighted average corn price increase of $0.12/bushel. This is an increase of about $0.10/bushel for all corn sold in the surrounding region, and a $0.19/bushel increase for corn sold directly to the ethanol plant. For the case of a $0.12/bushel weighted average corn price increase, a land value increase of $161/acre to reflect the increase in returns per acre was estimated. Thus, landowners are the actual benefactors of an increase in corn price from ethanol production.

Keywords: Agricultural Finance; Crop Production/Industries (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jasfmr:190688

DOI: 10.22004/ag.econ.190688

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