Recent fuel price fluctuations, the volatile corn market and skyrocketing food prices have heated up a complicated debate about the impact of mandated increases in ethanol production in the United States.
While ethanol boosters blame fuel price increases for rising food and feed prices, many livestock producers and grocery lobbyists, put the onus on federally mandated increases in ethanol production.
The energy bill passed by Congress last year requires nine billion gallons of ethanol to be blended into gasoline in 2008 and just over 11 billion gallons in 2009. The mandate requires refiners to blend 36 billion gallons of ethanol by 2022.
Many ag experts would agree that corn growers, beef producers and the dairy industry stand to gain from increased ethanol production, while poultry and hog producers, grain elevator operations and grain shippers may be negatively affected.
The impact of the mandates on soybean and wheat growers, experts say, the overall effect is yet to be seen.
While it’s understood that the competition for corn is a challenge to various sectors of agriculture, there are benefits from ethanol production at the local level, that all parties seem to be able to agree on.
One of the first positives listed for area corn producers is that the presence of an ethanol plant within 10-20 miles may account for higher corn prices of up to 12 cents per bushel. For producers 20 to 40 miles out a bump of three to five cents per bushel seems to be the average.
Close proximity to an ethanol plant may also offer more market security for the corn producer and, in some cases, may reduce the distance or costs of transporting the crop.
“I think most everyone (ag producers) in the area deals with ADM in one way or another,” said University of Nebraska-Lincoln Extension, Ag Educator, Allan Vyhnalek. “Most producers in this area are either selling their crops to ADM or purchasing the by-products for feed.”
Vyhnalek said distillers grains, a by-product of ethanol production, already makes up about 50 percent of all feed used by most feed lots in and around the Columbus area.
“I would call that a very significant impact on our area,” he said, “and I’m pretty sure that even the small producer bringing in a truck load of corn is welcome to bring it to the ADM plant.”
Rich Richey, general manager at Husker Coop in Columbus noted the positive impact of the local Archer Daniels Midland (ADM) ethanol plant on the area ag markets.
“I think for the farmers generally it’s a really good deal having the ethanol plant in this area,” Richey said. “ADM has created a market here that would not be here without it. For grain elevators without extensive rail service, any ethanol plant close by is a good thing for them.”
According to the Nebraska Ethanol Board, ADM produces an estimated 100 million gallons of ethanol at it’s Columbus wet mill plant. At its current capacity the plant uses an estimated 37million bushels of corn for ethanol production.
The plant is expected to produce an additional estimated 275 million gallons once the construction of its dry mill plant is completed in 2009-2010.
“Through our corn wet mill in Columbus, and our dry mill under construction, ADM is helping promote economic growth in the community while producing high-quality products from renewable resources like corn,” said ADM Plant Manager Luther Pohlmann. “By creating a range of products from farmers’ crops, we help increase demand for the local harvest.”
A spokesman for the company said the Columbus plant currently employs 391 full- and part-time employees.
“ADM’s 2007 personal property valuation for equipment and fixtures at it’s various properties in Columbus was $35, 530,488 which generated $518,117.30 in taxes for Platte County,” said Platte County Assessor Vanora Mulligan. “The 2008 valuation is increasing. That new valuation is $40,450,450.”
ADM owns land and buildings listed under eight parcel numbers for the names ADM and Minnesota Corn Processors in Platte county.
Mulligan provided the total 2007 valuation for lands and buildings owned by ADM, which included a tax credit of $83 per $100,000 valuation. The total valuation on ADM’s real properties for 2007 totaled $95,240,185 which generated $1,097,177.28 in tax benefits to the county.
“Tax-wise, having an ethanol plant in the county is very beneficial, especially for the school districts and employment of our county residents,” said Platte County Supervisor Ron Pheifer, of Lindsay.
Supervisor Pheifer also farms about 1,300 acres of grain crops in the Lindsay area.
“For the ag sector having ADM so close raises the price of corn anywhere from 10-15 cents per bushel for us,” Pheifer said. “So, of course, when area producers get more for their corn, that’s going to help local businesses. There are many factors that make the presence of the ethanol plant a very positive thing for the county.”
Pheifer said that even in light of slightly higher transportation costs due to distance and the rising cost of diesel fuel, the benefits of higher corn prices continues to offset those rising expenses.
For more information about the complex issues related to the impact of ethanol production visit the Nebraska Ethanol Board online at www.ne-ethanol.org; the Nebraska Cattlemen Association at www.nebraskacattlemen.org; the American Coalition for Ethanol at www.ethanol.org; the Environmental Protection Agency at www.epa.gov/OMS/renewablefuels and the Renewable Fuels Association at www.ethanolrfa.org.
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