In March, I headed back to Manhattan, KS for my second on-campus session in the Master of Agribusiness program. The week was filled with finals, turning in papers and projects, and doing class presentations. Listening to all of my classmate's research projects and presentations was very interesting and informative. I really enjoyed learning about different areas of agriculture and agribusinesses from all over the world! One of my assignments was a research paper for my Agribusiness Logistics class. I chose to look at how the ethanol industry has changed corn inventory management in Iowa. Below I've included a brief excerpt from my research paper.
By producing 2.37 million bushels of corn in 2014, Iowa remains the leading state for corn production. This corn has many uses in the state from food and livestock feed, to exports, and ethanol. With 42 ethanol plants, the State of Iowa leads the country in ethanol production capacity at 3.8 billion gallons, representing nearly 25% of all U.S. ethanol production. When the Iowa ethanol boom began in the mid-2000's, it began to play a prominent role in how, when, and where farmers market their corn. The growth of the industry has led to changes in inventory management. It is critical that ethanol plants have access to corn year round, whereas exports come and go. After research and interviews with industry professionals in key segments of the supply chain, here is an overview of the findings.
Since ethanol plants require just in-time inventory for their corn supply, they often times control the local corn movement by out-bidding other corn purchasers. This has led to more flexibility for farmers as to when and where they sell their corn crop. Due to this farmers are holding on to their corn longer and transporting it further distances in order to capture the best price. This has also led to an increase in on-farm grain storage capacity. As you can see in the graph below, according to the USDA Census of Agriculture, grain storage capacity per farm in Iowa has seen more than a 50% increase from 2002 to 2012.
Another area that has seen changes is transportation. Railroads are being used less for moving corn and more for soybeans and ethanol co-products. Additionally, with corn being hauled longer distances, more heavy truck traffic is causing road conditions to deteriorate. In conclusion, farmers, ethanol plants and cooperatives have shown their ability to adapt to changes in inventory management, transportation, and storage issues. With uncertainty in the future of the ethanol industry, we can be sure that they will have to continue to adapt and change to maintain an efficient supply chain moving forward.
This topic might be very familiar to most people living in the Midwest, especially Iowa. However, some of my other classmates may not have known hardly anything about the ethanol industry or changes it has caused in the supply chain. I know that I learned a lot about a wide variety of topics from my classmates. Always remember to learn from those around you and don't hesitate to consult or collaborate with someone who may have more expertise than you in a particular area.
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