By Karl Blankenship, The Chesapeake Bay Journal

Note: This article is an exerpt from the full article which appears in the April Chesapeake Bay Journal.

With a sudden boom in ethanol to help slake the nation’s thirst for transportation fuel, farmers are finding that corn has more in common with gold than just its color.

Corn prices in the region have doubled since late last year, hitting more than $4 a bushel. As a result, farmers everywhere are weighing how much to plant. How they answer that question could have huge ramifications for the Chesapeake Bay.

While corn prices have spiked before, the increase has been temporary. This time, the U.S. Department of Agriculture is projecting prices to be more than $3.50 a bushel for years as demand for ethanol grows here, and abroad.

The ethanol boom creates a complex set of winners and losers. While increased corn prices is great news for grain farmers, higher feed prices are hammering many dairy, poultry and hog operations.

Another loser could be the Chesapeake.

If 1 million additional acres of agricultural land in the Bay watershed were converted into corn production, it could increase nitrogen runoff by roughly 15 million pounds a year, especially if farmers choose to convert idle land, hay fields, and pastures—all low-runoff uses—to corn, according to rough estimates by Tom Simpson, a soil scientist with the University of Maryland’s College of Agricultural and Natural Resources.

That would negate a quarter of the annual nitrogen reductions in the Bay watershed since 1985. Reducing the amount of nitrogen and phosphorus, which fuel algae blooms in the Bay, is the focal point of Chesapeake cleanup efforts.

High prices may also discourage participation in some conservation programs. For instance, programs that pay farmers to turn crop land into streamside buffers are less attractive when that land could produce $4-a-bushel corn. “I think there is going to be a lot of fence-row to fence-row activity in the next few years,” said Jim Pease, an agricultural economist at Virginia Tech.

For the most part, decisions driving ethanol production are being made by political and economic factors at the national scale. Water quality concerns have barely been raised as a side effect of using corn to supplement the nation’s fuel supply. “This is not a matter of what we in the watershed are going to do to water quality,” Pease said. “It is a matter of what is going to be done to us.”

It’s not just an issue for the Bay. Curbing nitrogen pollution—which stimulates excessive algae growth in saltwater—is a goal for most coastal areas around the nation and many parts of the world. Officials are considering a 30 percent nitrogen reduction goal for the Mississippi basin, which drains half of the country, including the Midwest Corn Belt, to relieve a summertime oxygen-starved “dead zone” in the upper Gulf of Mexico.

Demand for corn is increasing pressure to take land out of the USDA’s 2-decade-old Conservation Reserve Program, which pays farmers “rent” to take marginal and environmentally sensitive lands out of production. Hunting and wildlife groups have called CRP the “holy grail” of wildlife conservation, as it provides more habitat for birds and other species than all of the national wildlife refuges combined.

In February, leading agricultural groups petitioned the USDA, asking that it allow 27 million of the 36.7 million acres of land in the Conservation Reserve Program be withdrawn without penalty and returned to production to help meet the demand for corn. A decision is expected later this year.

But with pressure to place land in production, it will be more difficult to set streamside buffers aside as filter strips to protect waterways from runoff. State tributary strategies, which guide Bay cleanup efforts, call for more than 570,000 miles of forested stream buffers, and 237,000 miles of grass buffers.

Through 2005, only 8 percent of the forest buffer goal and 22 percent of the grass buffer goal had been met. Officials say closing the gap will only get more difficult. “I’m happy for the farmers to see the $4 (per bushel) corn because that could preserve some agriculture in the state,” said Russ Perkinson, of the Virginia Department of Conservation and Recreation. “But that’s another side effect.”

Brian Snyder, executive direct or of the Pennsylvania Association for Sustainable Agriculture, said higher grain prices may encourage more dairy farmers to switch to grass-based operations. Dairy farms that rely on pastures rather than imported food typically produce less milk, but can be more profitable as they have lower operating costs because they need less equipment and grain. Also, their milk often commands premium prices.

Intensive grazing operations also tend to produce less nutrient runoff. “It will push many farms that may have been on the edge already to try grass-based systems,” Snyder said.

But the real hope is in cellulosic ethanol. Many see the short-term boost in corn production as part of a transition to ethanol from other products within a few years.

The catch: Technology to produce cellulosic ethanol remains largely a research issue. Corn-based ethanol technology has existed ever since the first still; people like Jack Daniels made a living making it. Creating ethanol from switchgrass and other cellulosic material require an added step to convert plant fibers into sugars that are more easily fermented. While several methods exist, they are not cost competitive with corn-based ethanol and gasoline.

But with the booming demand for renewable fuels, research money is pouring into cellulosic ethanol. The U.S. Department of Energy earlier this year announced grants to back six cellulosic refineries. The plant being built in Clearfield County, PA, will also have a cellulosic research operation.

Nonetheless, some are concerned that once the infrastructure for corn-based ethanol is established, transitioning to cellulosic ethanol will be difficult.

“What worries me is that people are continuing to focus on the ethanol from grain,” said George Wolff, a longtime Pennsylvania agricultural consultant who has been active in Bay issues. “I don’t think the acreage is here to do it. There are a lot of dreamers out there thinking they can do it, but I think we ought to be concentrating on how can we take care of the ethanol from biomass.”

NewsClips: With Ethanol Boom, The Most Corn in 63 Years

Corn Price Jump May Cause Ripple in Western PA

Reprinted with permission from the April Chesapeake Bay Journal.

3/30/2007