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DISCLAIMER: I read the first few posts and did a light skim after that so if I tromping on someone my apologies. Also I will not be citing things because I'm lazy, feel free to disregard me if that doesn't pass your sniff test. Also my wife is a farmer's daughter and my father works for an ag related company this should give you my bias.

It depends on the farmer. Take for example Indiana. Indiana has a lot of corn, not Iowa levels but still a lot of corn. Indiana has lot of livestock, pigs, chickens, ducks(ok so that is quantitatively very small but in the area its in its kind of large), and cows (no distinction being made between dairy and beef). Corn is up roughly a third from year ago levels, maybe more maybe less depending on current market conditions. Now for these farms that means their corn cost of raising the animals just went up by a third (not so good for the farmer, especially when not all of that cost can moved to the consumer). Also because of the high corn cost, grain farmers are now tilling under soybeans and planting corn, causing beans to cost more, this also affects cost of live stock for the worse.

Now for the regular grain farmer corn at these price levels is great. Lots of money, but what happens, cost of equipment goes up (interesting correlation between the cost of equipment and the local price of corn) also the people who own the land the farmers rent (most of the land farmers use is leased and not farmer owned) these people see how much money the farmer is making and the next time that farmers lease comes up they ask for more money, farmer makes less again.

Also corn likes nitrogen the way monkeys like throwing their poo. This means the farmer's fertilization prices go up. Also to get the nitrogen involves a lot of natural gas (this adds to the whole environmentally ethanol is a wash equation). Additionally planting the same crop in the same field for years is very very bad for the field.

Now it depends on what and who you define as a farmer, if your definition includes huge corporate farms then a lot of this doesn't apply, but if you think of the traditional view of the farmer it comes out to a wash a lot of times. And if the farmer does livestock they end up with a whole operation setup for something that suddenly is becoming very unprofitable. Now then, if you want to extrapolate for the fun of it, those livestock farms feed the food preparing industry, that industry suddenly sees its cost go through the roof and since a lot of the industry is smaller players (think eggs, ducks... not Tyson chickens) they can't handle this increased cost and shutdowns become conceivable thus resulting in people out of jobs.

I guess my point is for some farmers this is great for others its actually not. On the plus side of all this is hopefully it will start discussion on the Farm Bill and all the subsidies the farmers receive (they get subsidies whether they make 150k net profit or lost 150k).

Now I am not against ethanol, anything that lessons foreign dependence... however I don't think corn ethanol is a particular good solution and ethanol plants need to built in areas where they aren't going to significantly hurt local economies. Moving people to diesel would add a great benefit and soy diesel is a much better product than corn ethanol.

tl:dr not always good for the farmer or the local area.