You are correct on the benefits to farmers.

I live in Iowa, have been imployeed by a seed company in the past, currently work for an agricultural related business and attended the Growing the Bioeconomy Conference this year in Ames, Iowa.  Take special note of the talks given by Dr.'s Miranowski, Jolly, Wisner and Euken, all professors in agriculture economics.  They clearly show in their presentations that there will be a squeeze on the supply side of ag products when we build ethanol plants.

Farmers are at their wits end in getting paid a living wage for producing food.  Food is kept cheap in this country at the expense of the people who grow it.  Not every year granted, but over the long haul a few bad years can drive a farmer out of business.  They are backing anything that increases commodity grain and food prices.  

I disagree that people in Iowa do not understand the ramifications of using plants for fuel.  They understand very well and expect a balance to be achieved some time in the future for land being used for food, fuel or structural materials.  Currently it is only food.  When other countries have a good crop, farmers lose money or must get a subsidy (greater subsidy?) from the government.  Iowa farmers would rather have everyone pay them more but have the country spend less on imported oil and subsidies.  Most people in Iowa understand this as well.  Give the farming base more money and they will be better stewards of the land and spend more money locally, that translates into jobs.  With enough income in the state you get new business development making farm equipment, service jobs and maybe even a new industrial base making real physical goods other than farm equipment.

The harsh reality is if Iowa ships more finished goods and less raw food stocks, out of state, the state nets more income.  It is all about transfer of wealth.  Where is the wealth being generated vs where do we want it to be generated?  Right now there is a giant sucking sound of money going to oil companies and/or overseas.  This must end, either by design or after all the wealth is sucked out of the state and country.  And I am sure this means more food must be grown outside of Iowa but isn't that what the shop locally for food movement is all about?