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ROBERT SIEGEL, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Robert Siegel.

MELISSA BLOCK, host:

And I'm Melissa Block.

Here's how it looks for this year's planting forecast. Soybeans, cotton, and rice all down. Corn way up. And of course that's because of the surge in ethanol production. The Agriculture Department projects that 90.5 million acres of corn will be planted this year. That's 15 percent more than last year. It would be the most corn planted since 1944.

Ken McCauley is part of the corn boom. He's a corn farmer from White Cloud, Kansas, and is also president of the National Corn Growers Association. He's in Washington to lobby for corn growers and joins us in our studio.

Thanks for coming in.

Mr. KEN MCCAULEY (President, National Corn Growers Association): Thank you, Melissa.

BLOCK: So it sounds like you're following the trend. You're going to be growing more corn this year as well.

Mr. MCCAULEY: Yes, we are. On our farm we're going to produce an extra 25 percent. The market opportunities were more this year and it looked like we could make more money. So we usually grow in a 50-50 rotation. We'll produce 75 percent corn this year and 25 percent soybeans on our farm.

BLOCK: What do you get now for a bushel of corn? How much is it going for?

Mr. MCCAULEY: Well, before today's report, corn price was probably $3.85 per bushel.

BLOCK: And compare that with, say, a year ago.

Mr. MCCAULEY: A year ago I think the prices were in the $2.00 to $2.40 range.

BLOCK: You, I gather, have also invested in three ethanol plants. Is that right?

Mr. MCCAULEY: That's right.

BLOCK: So you, I think, wouldn't want corn prices to be too high at that end of things.

Mr. MCCAULEY: Well, when a farmer owns interest in an ethanol plant or any production facility and also raises corn it's a perfect hedge as we call it. Because you'll make profit on one or the other, or actually you could have a happy medium and have profit from both.

So a farmer has always been diversified. If you're owning either a facility that grinds corn or feeds cattle, you're actually taking it from one pocket to another.

BLOCK: Is there a risk that if there's too much corn production that there could be a glut, prices will tumble, there's just too much out there?

Mr. MCCAULEY: You could have that, but the chances of that happening would be pretty low, looking at the demand we've got in the next year or two from the ethanol, livestock, and our exports.

BLOCK: There is the expectation that as corn prices go up, that meat and poultry prices are going to go up too.

Mr. MCCAULEY: We've studied that and we really think that if they go up it will be a very small amount. Below 10 percent, probably even below 5 percent. Because if corn gets too high, farmers look for other ways to substitute for high priced feed ingredients. There's a wide array.

We have a product that we call distiller's grains that's a byproduct of the ethanol process. That's a very high quality process feed that really fits into cattle feeding and diary feeding. And that is discounted cheaper than actual whole corn. So that's one alternative. As we increase with the ethanol industry there will be more of those on the market which will be at a lower cost. There's all kinds of alternative feeds like that in the industry.

BLOCK: When you think about the future of ethanol and what's going to happen with more and acreage devoted to corn, there would be people who would say that's not necessarily a good thing. That maybe this is land that shouldn't be planted, that there are environmental affects of all that.

Mr. MCCAULEY: Well, we think that we can produce enough corn to satisfy the industry off of the cropland that's being produced today. We have a trend line yield for corn that's increasing every year. We think we can produce 15 billion bushels of corn in the near future. We've been saying that we can do that by the year 2015, but we will do it before that.

We've demonstrated today we're looking at a 12.7 billion bushel crop this year. That will go into producing 15 billion gallons of ethanol, along with keeping the livestock and export and human food satisfied as we go.

BLOCK: I guess as with most things in farming, a lot of what happens with this crop this year will depend on something that none of us can control and that's the weather.

Mr. MCCAULEY: Weather's always important and I worry about it less every year because of our new technology in the seed industry, the way we do our farming today versus how I did it when I started. We've no-tilled our land ever since 1982, and that means we haven't disturbed it. The organic matter has just laid on top of the ground and made more organic matter. And actually it's kind of a peat moss type where it holds the moisture better.

We used to think we had a week between rains in July before we lost some yield. I really believe we have three weeks now between rain. So we've become more stable in our production and also more stable in the way our yields grow year to year.

BLOCK: Ken McCauley, thanks a lot.

Mr. MCCAULEY: Thank you, Melissa.

BLOCK: Ken McCauley grows corn and soybeans in White Cloud, Kansas. He's also president of the National Corn Growers Association.

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