Magazine article Amber Waves

The Power of Proximity: Ethanol Refineries Drive Increased Corn Planting in Their Vicinity

Magazine article Amber Waves

The Power of Proximity: Ethanol Refineries Drive Increased Corn Planting in Their Vicinity

Article excerpt

Between 2005 and 2010, increasing demand for biofuels contributed to growth in U.S. corn area by more than 6 million acres and channeled a third of U.S. corn output into ethanol feedstock. An understanding of the multiple effects of this rapid growth on rural economies can help inform policies geared toward greater economic and environmental sustainability. Focusing on just one of these effects, ERS researchers estimated the extent to which biofuel expansion helped reshape the spatial pattern of acreage and planting decisions across a wide swathe of the U.S. Corn Belt.

To measure the impact of ethanol demand on local agriculture, ERS researchers examined farmers' crop decisions in response to the introduction and expansion of ethanol refineries in their area. The researchers used annual crop data to analyze the impacts of ethanol refineries on area planted to corn in 12 States between 2006 and 2010. Using high-resolution data, originally collected with the help of remote sensing satellites, they tracked year-to-year changes in crop acreage. The production data, together with information on ethanol refinery locations and capacities, enabled them to observe the responses of corn growers for each year during the study period. Findings reveal a statistically significant and large acreage response by corn growers to the nearby presence and capacity of an ethanol refinery. On average, in 2006, a 1-percent rise in a neighborhood refining capacity led to an increase in corn acreage by 1. …

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