197Does Corn Ethanol Cost or Pay
- Apr 6, 2007Listen up! Ethanol ear money stays home. Money otherwise ear marked
for MidEast tourist and terrorist will stay home to tame the local
Ethanol's billion-dollar impact in Missouri
Apr 6, 2007 12:01 PM, By Jason L. Jenkins
University of Missouri
Missouri ethanol production capacity is expected to reach 500 million
gallons in 2008, adding an estimated $1.17 billion to the state's
economy annually, according to a study released by University of
The study, conducted by MU agricultural economists Vern Pierce, Joe
Horner and Ryan Milhollin, accounts for all direct, indirect and
induced economic effects of constructing and operating the state's
ethanol production facilities. The new study updates a report
released in February 2006.
"This industry is growing so rapidly, we had to revise our study,"
Pierce said. "Last year, our highest projected production capacity
was 350 millions gallons in 2008. Now, it's 800 million gallons in
2009. It's growing that fast."
Currently, Missouri ethanol plants produce about 160 million gallons
annually with an estimated economic impact of $522 million to the
state and an additional $43 million generated in federal, state and
local taxes, Pierce said.
"This is a great industry for Missouri," he said. "We have corn
producers with more money in their pockets, and that means more money
in small towns all over Missouri. It goes beyond just the corn
When annual ethanol production reaches 500 million gallons, an
estimated 177 million bushels of corn would be used to produce the
fuel, increasing the value of the state's corn crop at the farm level
by $76 million, Pierce said.
"That's $76 million new dollars in the pockets of Missouri corn
farmers," he said. "That level of production also will support more
than 7,700 jobs across the state, generate more than $110 million in
taxes, and produce 1.42 million tons of distillers grain that could
feed more than 1 million beef cattle."
Other grain producers also would experience increased profitability
as fewer acres are planted to soybeans, wheat and rice, resulting in
higher prices for those crops. However, direct involvement in
agriculture isn't a prerequisite to benefit from ethanol's economic
engine, Pierce said.
"A large percentage of ethanol plants are being invested in by local
farmers, and they're keeping the profits in their communities,
bringing it back to Main Street and not sending it to Wall Street,"
Pierce explained. "Those profits ripple through the community.
Equipment dealers, feed suppliers, veterinarians, grocers, retailers,
car dealers they all benefit."
Increased tax revenues also would allow for more local investment in
schools, roads and other infrastructure. "A 20-year-old man living in
Laddonia, Mo., and working at a factory in Mexico, Mo, will benefit
even if he doesn't grow corn or work at the ethanol plant," Pierce
said. "It's increasing economic value for the entire community."
Pierce acknowledged that ethanol's increased demand for corn would
likely push consumer prices for meat, eggs and dairy products higher
as increased livestock feeding costs force producers to reduce their
herds and production.
"But I'd argue that the cost of paying a little more for a steak or
gallon of milk is worth it if it means I can buy it at my local,
hometown grocery store that's still in business because of the
ethanol plant," he said. "These ethanol plants are going to be built
somewhere in the U.S., and Missouri can capture the value of turning
our corn into ethanol instead of exporting the raw commodity to other
"There's also still a tremendous opportunity for our livestock
producers to benefit from the use of distillers grains. Livestock
infrastructure wrapping around ethanol plants will grow to take
advantage of these feedstuffs grains, adding more economic impact.
"Ethanol provides opportunities for new wave of agricultural
diversification off the farm."
Complete findings of the study, which was funded through an
unrestricted grant from the Missouri Corn Growers Association, are
available on the MU Commercial Agriculture Web site:
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