“Bio-fuels are the answer,” is the essence of a discussion I had with a friend last month. This urbanite is as confident of that assessment as he is the direction of the daily sunrise.

Our conversation started with Americans’ appetite for gasoline. He quickly leap frogged to the conclusion that farmers can raise an infinite supply of corn, soybeans or any other crop. “There’s plenty of land; besides we pay farmers not to produce anyway,” he argued.

His logic continued that ethanol or bio-diesel production will not effect input costs for any other agricultural or food-production segment. He saw no trickle-down impact in terms of higher corn prices leading to higher prices for other products such as pork. His general attitude was that I was over-reacting, and that it will all simply work out.

Okay, by now I should anticipate, if not accept, the oversimplified viewpoint of my city brethren as it relates to agriculture. Yet it still can raise my blood pressure.

This well-educated engineer is not atypical. Being at least three generations removed from the farm, he’s critical of your agricultural practices, yet takes for granted your ability to produce food, fiber—and now energy.

U.S. consumers are hanging their long-term hopes on ethanol and bio-diesel production. Rural communities and crop producers are hanging their future prosperity on it. Politicians are hanging their election hopes on it.

There’s no question that we need to become more energy independent, but it will include an extended, multi-pronged approach, including changing our consumption patterns. I’m not sure if it’s human nature or Americans’ nature, but we wait too long to address difficult matters that might inconvenience us. 

To get things moving, politicians from state governors to the President are mandating ethanol-use levels by specific target dates. Their logic appears similar to my friend’s.

Where will that ethanol come from, and at what price?

If the entire 2005 corn crop had been processed into ethanol, it would have totaled 30 billion gallons. The United States used 141 billion gallons of gasoline last year.

The energy pricing structure and ethanol tax incentives will keep prices at the pump in check. However, you will face higher corn prices.

Prices for this year’s crop could move 30 to 50 cents per bushel higher than last year’s, and it’s not due to drought. Bob Wisner, IowaStateUniversity economist, has penciled out the prospect that corn prices could increase 30 to 50 cents annually for the next three to five years. Glenn Grimes, University of Missouri, outlines for every 50-cent-per-bushel boost in corn prices, pork production costs increase $2 per pig. 

Many questions will flutter around rising corn prices, such as will some producers exit pork production and focus on corn? Will more producers walk away from pork production altogether?

“Turning farm crops into automobile fuel has the potential to be the biggest change in U.S. agriculture since the introduction of the soybean,” says RonPlain, University of Missouri.

Projections point to a 50 percent increase in corn acres in the next six to seven years, which will include some conservation land. That increased acreage could harvest 15 billion bushels; this year’s crop looks to be around 11 billion. There also will be fewer soybeans planted.

It will be subtle, but evolving price pressures will lead to higher retail-product prices, and not just at the meat case. So consumers may find comfort in the promise of alternative fuels, but they will pay more elsewhere. 

Risk management on both ends of the pork production cycle will be more important than ever. It will require some creative thinking and new strategizing for future competitiveness.

The Farm Bill will play a key role. Commit now to stay informed and be involved. Subsidies, exports, feed grains and ethanol are just some of the issues that the marathon Farm Bill discussions will address. You can be sure that the outcome will impact your business. 

Agriculture will provide more of the country’s fuel. In the process it may even win over public hearts and minds, placing agriculture on a more valued pedestal. But true solutions will rely on many breakthroughs. It will be a long haul to get there, and you could pay a dear price.