By RAY WYCHE
Staff Writer
Indications are that corn, long a second fiddle crop to tobacco in southeastern North Carolina, may be on the verge of becoming a more profitable commodity to grow if corn prices continue to increase because of advances in ethanol production.
And as is usually the case when prices of a farm commodity suddenly rise, the cost of farmland skyrockets.
Land prices in certain sections of Columbus County have increased dramatically but people who work with land sales and agriculture say corn farming is not the reason. It’s housing development projects that make land in the southern part of the county fetch big dollars.
The value of land in the corn-producing Midwest has jumped because of expectations of a stronger demand for corn to make ethanol to serve as a substitute for petroleum. Farmland prices in Indiana last year rose 16 percent and percent 35 percent in Idaho.
Prices for land in parts of Columbus County have also increased considerably, but not because farmers are betting on ethanol for their financial salvation.
Locally, it’s the desire for land on which to build houses that has made real estate more desirable.
The jump in market value of corn is due in part to optimism that ethanol will live up to its potential as an alternate fuel to reduce the nation’s use of foreign oil.
North Carolina’s corn markets prove that the grain has indeed increased in value because of corn’s use to make ethanol.
On the Chadbourn grain market Monday, No. 2 yellow corn sold for $4.26 per bushel, compared to an average price for the year 2006 of $2.34 per bushel, according to figures of the N. C. Department of Agriculture.
Aside from real estate developers and their ready money, growing corn seems to promise profitability as ethanol fever abounds, but many variables are involved. If the price of crude oil remains high or increases, ethanol as an alternate fuel will become more attractive. Conversely, if crude oil prices fall, followed by a reduction of gasoline prices at the pump, corn-produced ethanol loses some of its glamour as an alternate fuel, and corn becomes less attractive from a profit-making standpoint.
The increase in corn prices will lead to an increase in the number of acres planted during the coming season, Columbus County Extension Service Agent Michael Shaw of Whiteville thinks.
Columbus County farmers planted 30,668 acres of corn in 2006, compared to 28,762 acres the previous year. In 2004, following tobacco quota reductions from 6,664 acres in 2001 to 6,180 acres in 2004 when tobacco acreage allotments were removed, county farmers increased their corn plantings to 36,954 acres.
The decrease in tobacco acreage in the county led many farmers to use their equipment and land for corn production.
“I think there will be plenty of corn planted this year,” Shaw said.
The attractive corn prices may influence the price of farmland to some extent, Shaw added, but it’s not the prime reason.
“Land prices have gone up tremendously,” Shaw said, but it’s development that fueled the land cost increases.
A look at county property tax records shows evidence of these increases, particularly in the southern part of the county adjacent to Brunswick County and the Grand Strand area around Myrtle Beach in South Carolina where growth has been furious.
Records of transactions in 2004, before the most recent evaluation took effect in January 2005, show that prices were close to or below the appraised value; but in 2006 and 2007, prices in most cases exceeded the tax value of the property in the southern part of the county.
In April 2004, a 67-acre tract in the Tabor City area was valued by the tax office at $114,500 and was sold for $103,000. In the same vicinity, 21 acres valued at $47,500 sold for $30,000. In August 2004, 12 acres near Tabor City sold for $30,000 despite its tax value listed as $32,100.
In contrast, 17 acres in the Fair Bluff area was valued at $12,000 but was sold in June 2006 for $23,500. About 56 acres near Tabor City had a 2005 tax value of $133,600 but was conveyed at $395,000 in August 2006.
Ninety-one acres near Bug Hill had a tax value of $140,300 but brought $849,000 when sold in June 2006. A 71-acre tract in the same area was taxed on a value of $41,200 but sold for $408,000 in December 2006.
Tax Administrator Richard Gore said in some of the above examples, the big differences in tax values and sales prices may reflect values of timber growing on the land; appraisers do not take timber values into consideration when evaluating land for tax purposes.
Nevertheless, Gore said, land prices have increased greatly in the southern area of the county as individuals and developers seek to take advantage of what has been a booming market for homes.
“Most of the buyers are from out of the state,” Gore said.
Coke Gray, county executive of the federal Farm Service Agency in Columbus and Brunswick counties, agrees that the price of land has increased in Columbus County but that the spike in corn prices has little if anything to do with the increase.“I don’t think that it (increase in land price) has anything to do with the price of corn,” he said. “The price of land is going up because people are speculating on land.” He added that land in certain areas of the county is attractive because of the proximity to Wilmington and the beaches.
Gray said that higher corn prices will result in an increase in number of acres of corn planted this year.
“Farmers have put in orders for more seed corn this year than last year,” he said.
Glenn Waters of Cape Fear Farm Credit that finances land purchases sees the land price increase as the result of developers looking for large tracts near Brunswick County, Wilmington and Myrtle Beach. Large sections of timberlands in southern and eastern Columbus County owned by individuals are particularly attractive to these businessmen, he said.
“A big asset in the county is larger acreages,” Waters said, as developers prefer single large acreage tracts to several smaller ones.
Waters added that he does not think rising corn prices are the main reason for the increase in land costs. People retiring to this area, particularly those who have lived in large northern cities, “want to live on more acreage,” he said.
Farmers expanding their corn plantings are not what has driven up the price of land locally; it’s the “overflow” from the Myrtle Beach and Brunswick County areas, so attractive to retirees, that make land in parts of Columbus County increase in value.
Recent property evaluations in Brunswick County and the resulting higher property tax values have steered developers to Columbus County to seek large tracts of land for housing developments.
There has been some talk of an ethanol plant located somewhere in eastern North Carolina where much of the state’s corn crop is produced, but ethanol production alone cannot claim responsibility for higher land values.
Despite the apparent rush to get into ethanol production by using corn as the base product, scientists are not unanimous in their opinions as to the feasibility of the program. Some say that energy-wise, ethanol is a negative undertaking; the cost in energy in producing corn, from which 90 percent of ethanol is now made, exceeds the energy provided by ethanol.
Other scientists claim that as research continues and methods improve, production of ethanol from corn and other grains can result in producing more energy than is expended in producing the ethanol.
Using ethanol as a fuel results in less air pollution than does the burning of petroleum-produced fuels.
Costs of producing corn involves use of fuel for farm machinery, and Columbus County farmers may have an advantage over those from other locations as more than 50 percent of row crop farming in the county is now done by the no-till method in which machinery use is lessened considerably. In the conventional, “old” way of preparing land for planting, at least eight trips over the field by a tractor were required. Using no-till, the farmer can get his seed into the ground with five trips.
Research shows that using ethanol as a fuel results in less contamination of the air from emissions.