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Iowa Ag Review

Abstract

Over the last year, the most talked about agricultural topic has not been the state of Doha negotiations, what the next farm bill would include, or when Japan would completely open its market to U.S. beef exports. Rather, the focus has been on ethanol. A combination of Congress passing the Renewable Fuel Standard Program, high oil and natural gas prices, two consecutive years of low corn prices, a continuation of the tax credit for ethanol, and a phase-out of MTBE have created a frenzy of investment in ethanol plants and huge windfall profi ts for owners of existing plants. Investors are in such frenzy because they know that if they do not act quickly enough, all the corn surplus areas will be spoken for by someone else’s ethanol plant.