Years ago a corn, oats, and hay rotation fed the family and the horsepower. Some grain went to the elevator and a wagon load of lime or potash came back to spread on the fields. But mechanization brought the need for improved roads and a way to haul fuel around and agriculture had to think how the infrastructure needed to be changed to accommodate progress. Today the same exercise is underway because ethanol production is a new variable in the equation and there are some significant demands on the infrastructure of agriculture that require it to be changed once again.

There may be adequate roads, utilities and other elements of infrastructure available for today’s agriculture, but when a new industry comes to the neighborhood, and several more pop up in the next county, the infrastructure may be stressed according to Economist Roger Ginder at Iowa State University. His study, Potential Infrastructure Constraints on Ethanol Production in Iowa, can really be applied to any part of the Cornbelt where ethanol has brought a change to the local economy. It is not just the county highway engineer who will have more roads to repair, but when a plant brings extra jobs, there will also be a need for more phone lines, computer technicians, and diesel fuel pumps with hot coffee near the cash register. Ginder says the current infrastructure in a community is closely matched with the corn and soybeans produced nearby. But the new ethanol plant is drawing down stored corn, and trucks are not only hauling corn in, but are loaded outbound with ethanol and distillers’ dried grains (DDGS.)

For this spring, the seed infrastructure is changing. More seed corn is being sold meaning seed corn companies have more activity, and popular varieties will have to be managed. Soybean salesmen will have a lot in common with the Maytag repairman trying to dust off the cobwebs. With a significant increase in corn acres, there will be more demand for fertilizer and crop chemicals than with soybeans, and the ag service industry will be taxed in getting it delivered or applied in a timely fashion. If the increased corn acreage persists, then additional trains of fertilizers will be arriving and more trucks will be on the highway for localized distribution. Nitrogen may be readily available, but possibly not in the volume of anhydrous ammonia that all producers wish.

Ethanol plants require a steady supply of corn, whether that is from farmers, from elevators, or from farmers through arrangements with elevators. Nevertheless, either steady truck lines will form, or rail sidings will be required to supply corn in larger quantities. Without railheads, the increased flow of corn on local roads will result in more trucks, more drivers, more wear and tear on pavements, and increased traffic volume in rural areas and through small communities unused to such volume. But once refined, an equal volume of outbound ethanol and DDGS products will be shipped in similar fashion.

Elevators provide storage, handling, and drying functions, but with a new game in town at the ethanol plant the relationship of those services will be changed to some degree. Elevators will have to carve out their niche, and the more aggressive elevator operators probably have already done so. But elevator managers will also have a significant challenge at the outset, since a large corn crop in 2007 and 2008 will yield 180+ bushels per acre that will need to be stored, displacing soybeans that would have needed only 30% of that space, pushing elevators to use more temporary storage to accommodate the extra volume.

Once the ethanol is refined it has to go somewhere. Currently it cannot be stored at elevators or feedlots where corn is found, but it has to find a home in a tank that can either hold it until blending or haul it to an ultimate user. Rail infrastructure in the form of sidings and tank cars are going to be needed in short order to haul ethanol out of the Cornbelt to metropolitan areas. The current rolling stock could be out of service for several weeks while making shipments from the Midwest to coastal fuel terminals for blending. New railcars are expensive and manufacturers are booked for as much as two years out. While proposals for pipelines have been made, no trenches have been dug yet for an ethanol distribution network.

Shipping DDGS is another issue, since it requires railcars that typically haul commodity grains, but getting it out of those cars is difficult and mechanical unloaders can sometimes damage freight cars. DDGS is a perishable commodity, and transportation must be efficient to deliver the product on time to a user, while retaining its value.

Summary:
Whether it is building new rail cars, repaving Main Street, or applying nitrogen 24 hours a day for a month, the Cornbelt can expect to refurbish its infrastructure with the onset of the ethanol economy. While this new industry brought a demand-driven corn market, it will be making demands on utilities, local governments, and the agriculture service industry which may share in the benefits, but will also share in the burdens and growing pains.