Ethanol producing corn may not by a safe bet for farmers.
Experts at the University of Minnesota predict that ethanol production from corn crops may not be a very profitable endeavor for farmers. They say tying the price of corn to the price of crude oil could be dangerous.
If unpredictable temperature, rainfall and other natural complications for corn crops were not already enough for farmers to battle, adding the fluctuating price of oil could only complicate crop profits. By investing in alternative fuel production, farmers are depending on oil prices remaining high. According to the U.S. Department of Energy, imported oil prices averaged $59.49 per barrel this year. However prices are expected to fall to around $50 by 2011 and even down to $45 in 2014.
Low foreign oil prices could translate into a lower demand for alternative fuels, such as ethanol.
Profits from ethanol producing crops also depend on the price of corn, which was around $4 a bushel this year, more than double what it was a few years ago. If the price of corn becomes too high, around $5, ethanol production plants would not be able to turn a profit, especially those who are still paying off capital investments.
This means that farmers would be getting paid more for their crops, but they would lose money through their investments in the plants that produce the alternative fuel.
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