The U.S. Secretary of Agriculture made an off-hand comment during an interview just a few days ago, and as soon as the story hit the press, it set off a firestorm. Even Ernie Brames, a southern Indiana farmer, was so concerned that he alerted Indiana Prairie Farmer and asked for clarification of what occurred.

According to Jacqui Fatka, reporter for Feedstuffs, a sister publication to Indiana Prairie Farmer, the Secretary noted that since some ethanol plants locked in corn at $7 in June when corn prices shot up, but now are setting with these contracts they must honor in a different economic climate, it might be necessary to loan them money to help them through the rough stretch. Some soon attached the word 'bail out,' a phrase in vogue these days, but that term was actually not used.

Apparently the Secretary was referring to making loan from a rural development fund that already exists. However, after several livestock groups made comments, issued press releases and made personal contacts, USDA backed off from talking about supporting ethanol companies currently under pressure.

According to Brames, livestock producers reacted so rapidly and violently because they've suffered under high feed prices for months, and have asked for relief in some form from USDA. None has been forthcoming. To hear that USDA would then loan money to these ethanol plants because they made what turned out to be a bad deal touched a nerve amongst many of the livestock groups' leaders and producers.

One ag economist sees both sides. He understands why livestock producers would be sensitive and might react to such an idea negatively. However, he also points out that the ethanol plants made rational decisions at the time, based on the information available to them. When they took the positions and bought $7 corn, there was considerable support for the idea that the flood damage was more severe in impacting yields than it turned out to be. Many were talking about prices going even higher. Saying that they should have known it wouldn't turn out that way is simply hindsight quarterbacking, and not a fair assessment of how many of the situation many of these plants found themselves in at the time.

The bottom line is that at this time, the 'story' is really not a story. USDA is not currently making loans to ethanol plants to 'bail them out,' as some inferred. The incident did illustrate, however, that nerves are on a raw edge when it comes to ethanol vs. the livestock industry, and that the need for cooperation and education there are huge.