Indiana Farm Bureau public policy specialist Kent Yeager speaks about the farm bill, food supply and ethanol at the seventh annual Farming and Agribusiness Breakfast held by the Community Foundations of Hancock, Henry and Shelby counties.
Indiana Farm Bureau public policy specialist Kent Yeager speaks about the farm bill, food supply and ethanol at the seventh annual Farming and Agribusiness Breakfast held by the Community Foundations of Hancock, Henry and Shelby counties.

NEW CASTLE, Ind. — Farm income may not remain as strong as it has been, but ethanol will continue to play a crucial part in the equation.

Doubling property taxes and tightening margins are likely to challenge farmers’ bottom lines, though Indiana lawmakers are talking about changing the formula used to assess the value of farmland, noted Kent Yeager, Indiana Farm Bureau public policy director, who spoke at the seventh annual Farming and Agribusiness Breakfast held by the Community Foundations of Hancock, Henry and Shelby counties.

“It’s hard to keep up with the amount of change taking place in agriculture, but you notice it more if you’re not doing it every day,” he said.

“Back in 1977, my dad would talk three times a week about how farming had changed since he was a kid, and though I thought we’d never see that kind of change again, we’ve seen even more change since the introduction of biotech seed in 1996.”

“We’ve had a lot of change in the last several years in people interested in food policy,” the public policy specialist said. “The rise of different operations, such as goat farms producing cheese, as well as agritourism, all give the chance for commercial farmers to put a face on agriculture.”

He said risk mitigation has contributed to great farm productivity in the U.S. and that he believes the government structure has resulted in citizens sharing the risk to contribute to an abundant and safe food supply.

Yeager stressed that the ethanol industry is very important to agriculture and that the Renewable Fuels Standard is needed.

Ethanol plants and livestock producers struggled with high corn prices resulting from the drought in 2012, though ethanol blenders have the option of using surplus credits from prior-year blending in the form of Renewable Identification Numbers to meet the current standard, he noted.

“A lot of farmers know how important ethanol is, but most people don’t realize that farm prices and margins are driven by ethanol,” he stressed.

“Ethanol is fueling corn prices through a market-based system related to oil prices rather than a traditional feed base.”

He said that while ethanol is not the only answer to the country’s energy needs, it works well with current technology and also produces an abundance of products.

Yeager said cellulosic ethanol is likely to be produced at $150-per-barrel crude oil prices combined with technological breakthroughs and implicit carbon prices, though biofuels will not come without a strong incentive.

“I hope the other conclusion people reach is it’s important for farmers to have crop insurance to manage risk, and there is a public benefit to having risk management and conservation in the farm bill,” he added.

“A lot of money in the Environmental Quality Incentives Program is helping people deal with the challenges they face on their farm.”

U.S. farmers produced 272.5 million tons of corn for the 2012-2013 year, down from 313.9 million tons produced for 2011 and 2012, he said.

By the same coin, U.S. production of soybeans has declined greatly since the 1960s, giving way to emerging markets in Brazil, which now produces more soybeans than the U.S., Yeager said.

“We’ve had two years way below the trend, but we bounced above the trend a lot, too,” he said.

“We could end up with a 15-billion-bushel corn crop and prices beginning with the number three — it’s part of the uncertainty in agriculture.”