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Ethanol plants cropping up as aid to farmers

By Ashley M. Heher

Associated Press

FILLMORE, Ind. -- Kim Ames has weathered good times and bad on the 4,000 acres his family has farmed for three generations.

He hopes a $125 million ethanol plant being built near his central Indiana farm tips the scales in favor of the good, giving him a local buyer for half the 300,000 bushels of corn he produces each year.

"I think it's good," he said. "We've always been exporting our corn somewhere. Now we'll be doing something (local) with it."

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The Putnam Ethanol plant being built in Cloverdale, about 40 miles west of Indianapolis, is one of dozens of ethanol plants being developed across the country as part of a national push toward alternative fuels.

The industry is about to get a major push from new federal energy legislation that would require refiners to double the use of corn-based ethanol in gasoline to 7.5 billion gallons a year by 2012. After the U.S. House of Representatives approved the energy bill Thursday, the White House said President Bush looks forward to signing it into law.

The Senate approved the mammoth $12.3 billion legislation on Friday.

The bill would lead to about $6 billion in new investment in ethanol plants across the country and generate about 200,000 jobs, said Monte Shaw, a spokesman for the Renewable Fuels Association, an industry trade group.

"It's going to be good for consumers, good for taxpayers," he said. "It's going to be really good for rural communities."

Proponents say the U.S. needs to produce more ethanol, a corn-based fuel additive made from distilled grain mash, to reduce its reliance on foreign oil. Oil prices have hovered around $58 a barrel recently, driving up costs for gasoline, airline tickets and other consumer goods.

Ethanol was used in cars in the early 1900s, but mass production of the fuel didn't begin until the 1970s. In 2004, 81 plants produced about 3.4 billion gallons of ethanol nationwide, according to the Renewable Fuels Association.

Almost 86 percent came from the Midwest, which produces more than two-thirds of the nation's corn.

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Iowa is the nation's leading ethanol producer, with 16 plants and another 11 in development.

The Iowa Corn Grower's Association reports that ethanol plants added $16 million in tax revenue to the state and $2.5 billion to local communities.

"It's added a great deal of value to Iowa's corn producers," said Shannon Textor, marketing manager for Iowa Corn, an agricultural trade group.

Impact on Minnesota

Currently, ethanol's economic impact on Minnesota has created $587 million in output and has created 2,562 jobs. Fourteen percent of Minnesota's crop or 140 million bushels of corn are made into ethanol and livestock feed yearly. Minnesota's 14 plants can create 380 million gallons of ethanol each year. Close to 10 percent of the state's gasoline is being replaced with ethanol as 10 percent blends are required state-wide. By processing corn products instead of exporting raw corn, the value of each bushel nearly doubles. In addition to the creation of ethanol fuel, corn produces 1 million tons of high protein livestock feed plus other products including; industrial ethanol, starch, sweeteners, and carbon dioxide.

In Southeastern Minnesota, there are plants in Claremont and Preston.

Ohio has about six ethanol plants in the works, said Bill Teets, of the Ohio Department of Development.

Indiana, the nation's fifth-largest corn producer, already has one ethanol plant. New Energy Corp. in South Bend produces more than 100 million gallons a year.

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The Putnam County plant, expected to open in August 2006, could produce 72 million gallons a year.

Terry O'Malley, chief executive officer of Putnam Ethanol, said his company plans to build two other ethanol plants in Indiana.

"I think a lot of people want to get on the bandwagon," O'Malley said.

Critics question whether that can be sustained.

They say ethanol increases the cost of corn, which in turn means livestock owners pay an average of $3,500 more a year for feed. They also contend that while E85, the gasoline-ethanol mix sold at 400 stations nationwide, costs an average of 30 cents a gallon less than regular gasoline, it is also less fuel efficient.

Recent research by a Cornell University professor says ethanol uses about 30 percent more energy to produce than it puts out.

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