Six area ethanol plants open since 2001

Since 2001, six area ethanol plants have opened, bringing hundreds of new jobs, millions of dollars in capital investments and an added market for local corn producers.

The six plants - in Ashton, Coon Rapids, Denison, Emmetsburg, Marcus, Galva and Sioux Center - currently combine to distill more than 400 million gallons of ethanol annually, eating up some 150 million bushels of corn. The regional output is expected to more than triple within the next two years, with the expansion of some existing plants and the opening of nine new facilities.

Twenty-five ethanol plants are now operating in Iowa, and some 40 more are in construction or planning stages. One of the largest concentrations is in the northwest corner of the state. That's no accident, say local ag leaders and industry officials.

"We produce a lot of corn in Northwest Iowa," said Bernie Punt, general manager of Siouxland Energy and Livestock Co-op in Sioux Center, which was the region's first ethanol plant to open in 2001. "We've got rich corn ground."

Historically, much of that corn had been exported out of the state by rail or truck. Now, more and more is being delivered to neighboring ethanol plants. That's helped raise local cash prices by 5 to 10 cents per bushel or more. Because of the long distance to large grain terminals like those on the Mississippi River, prices in Northwest Iowa traditionally had been lower than other regions of the state.

"We have the cheapest corn around," said Tom Olsen, an ISU Extension farm management field specialist based in Buena Vista County. "The plants are going to locate in the golden circle of cheap corn."

Northwest Iowa's large livestock industry also makes the region an attractive environment for ethanol production. Besides fuel, the ethanol process produces a byproduct called distiller's grain that's a high-protein source of feed for livestock, particularly cattle. A 50-million-gallon ethanol plant, for instance, produces some 160,000 pounds of the feed. Sioux County ranks first in the state in beef production, and a number of other area counties also have large cattle production.

There also has been no shortage of local investors for the rapidly growing ethanol industry. Jim Meyer, an Odebolt farmer who is a regional director for the Iowa Corn Growers Association, said many area residents have seized on opportunities to invest in renewable energy that helps reduce water and air pollution and the nation's dependency on foreign oil.

"There just isn't anything that can compete with renewable energy as an investment in this area," said Meyer, who serves on the association's use and production committee. "I look at it as a generational opportunity."

Equity drives often have raised $20 million to $30 million in a matter of weeks. In some cases, interest has been so great that some potential investors have been turned away.

More than 6,000 Iowa farmers, looking to create a new market for their crops, have invested in one or more ethanol plant, according to the Iowa Corn Growers Association. Most of the state's existing ethanol plants are producer-owned. But many of the latest projects are being financed by large outside firms and investors, looking to capitalize on an increasingly profitable industry. Demand for ethanol has surged since Congress last year approved legislation that more than doubles the amount of the fuel the nation's motorists are required to burn.

Vera Sun Energy, the nation's second-largest ethanol producer, has opened a plant in Fort Dodge, and has plans to build two more in the state, including a 110-million-gallon plant at Hartley in O'Brien County.

Another large industry play, US Bio Energy, is scheduled to open a 100-million gallon plant at Albert City in November. It will become the region's largest corn distilling facility, but six other area plants in the planning stages are designed with an annual capacity of 100 million gallons or more.

Some existing plants also are in the midst of major expansions. Amaizing Energy, which began producing ethanol just last year, already plans to double its annual capacity to 80 million gallons. Little Sioux Corn Processors is moving ahead with a 52-million-gallon expansion of its 40-million-gallon plant near Marcus.

Earlier this year, Little Sioux also announced plans to build a 100-million gallon plant near Akron. It's one of three ethanol plants planned for Plymouth County, with the other two slated for Hinton and Merrill. Of 16 Northwest Iowa counties, all but two are now home to ethanol plants or in line to get at least one, with Lyon and Clay as the only exceptions.

Ag officials worry the region will face a corn deficit if all the plants get built. In Iowa, eight major expansions and 34 new plants under construction or in planning stages will consume a total of 1.5 billion bushels of corn. Counting the existing 900 million bushels devoted to ethanol, the new demands will exceed the 2.1 billion bushels the state's farmers annually produce. Ethanol increasingly will be competing for other corn uses, such as livestock producers and food processors.

Ethanol producers likely will need to import more corn from other states or convince area farmers to grow more of the crop. Olsen, the ISU Extension specialist who serves nine area counties, said the latter would require a change in the traditional tillage systems. Growing more corn on the same ground year after year, rather than rotating with soybeans, would increase production costs and put additional demands on the soil, he said.

"It needs to be a significant incentive for a farmer to add corn on corn acres," he said.

Dave Dreeszen can be reached at (712) 293-4211 or davedreeszen@siouxcityjournal.com