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Ethanol Helps Fuel US Family Farms' Future

U.S. farmers have gone through many cycles of boom and bust. But as VOA's Jeffrey Young reports, prospects for American agriculture are looking up, thanks to rising crop prices and land values, especially in areas where corn is grown.

In the Midwestern U.S. state of Iowa, corn and other crops cover the gently rolling ground as far as the eye can see. John Thompson farms near Webster City.

Thompson says this bounty is a gift from natural events long ago. "Here in Iowa, we've got some of the richest black topsoil of anywhere you'll find in the world. It's deep, and it's extremely fertile. The reason for that is during the Ice Age, there were four glacial movements that came through Iowa," he explains.

But Iowa's rich soil did not always translate into wealth for those who farmed it. In the early-to-mid 1980s, depressed crop prices and high interest rates caused a growing number of family farms to fail.

Curt McKoskey was one of the casualties. He now manages a chicken hatchery in Webster City. "I farmed for several years and fell victim to the farm crisis [of the 1980s]. And that's why I am working here," he says. "This is one way that I can keep my foot in the agricultural door, so to speak."

McKoskey says the farm situation then went from bleak to bright because of a series of federal laws subsidizing ethanol as an alternative fuel. "Until the ethanol business got going, for instance on the price of corn, people were getting the same price for corn as they were getting 20 years ago. But all of their expenses kept going up." If it wasn't for government, there would probably be a lot of small farmers who would not survive."

The demand for ethanol has doubled the price of corn -- and sharply hiked farmland values -- in recent years.

Another crop, soybean, is being converted to a renewable fuel called biodiesel. The search for new energy sources has enabled many family farmers to put money in the bank, and invest in new machinery, better seed and other ways of getting more out of their land.

Webster City farmer John Thompson notes during a visit to the Iowa State Fair, that benefits everyone. "There is technology here that is increasing the production of the corn. And so we are seeing yields that we have never seen in the past. Which is also helping to contribute to feeding the world" he says.

When farmers make money, it spills over into the broader rural economy. Companies that store and ship grain to markets are busier. Equipment manufacturers get more sales. Retail stores in farming communities also benefit from rising incomes.

The U.S. government says family farms account for 98 percent of all farming. And with family farms doing better, there is more incentive for young people in rural areas to stay.