Ethanol continues to shine in otherwise bleak ag outlook

Source: By Robert Pore, Grand Island Independent • Posted: Tuesday, March 28, 2017

National Agriculture Day was celebrated last week. While commodity prices continue to sag, causing farm income to decline, Nebraska’s ethanol industry continues to provide a good foundation to the state’s ag industry.

“In a challenging time of agriculture finances, the ethanol sector continues to be a strong market for corn growers,” said Todd Sneller, Nebraska Ethanol Board administrator. “This increase in Nebraska ethanol production shows that more corn is being purchased locally and turned into not only ethanol, but a number of valuable co-products.”

Recent reports indicate a strong 2017 for ethanol production, Sneller said. With added capacity and a diversified platform, he said ethanol is a bright spot in an otherwise bleak agriculture forecast.

An impact study by University of Nebraska-Lincoln economists in 2015 revealed Nebraska’s ethanol production capacity growth between 1995 and 2014 was tenfold, with a $5 billion annual economic impact. “Just a few years later, that growth continues,” Sneller said, with a record year projected.

The operating capacity of about 2.2 billion gallons of ethanol is an increase of 5 percent compared to 2015, Nebraska ethanol producers used 31 percent of the state’s corn crop in 2016. This operating capacity is an increase of five percent compared to 2015.

In 2016 Nebraska’s ethanol industry produced more than 7.2 million tons of distillers feeds and 268,000 tons of corn oil. Additional co-products include corn syrup, dry starch and specialty livestock feeds.

“We see what economists describe as an economic ‘bounce’ when we take advantage of the added value as grain is converted to food, fuel, fiber and bioproducts,” Sneller said.

In addition to purchasing more corn, several ethanol producers have invested in new technology to increase capacity and product diversification. Sneller said about $150 million has been invested in existing ethanol plants like Siouxland Ethanol in Jackson, Flints Hills Resources in Fairmont, E-Energy in Adams and Archer Daniels Midland (ADM) in Columbus.

“Plants in Lexington and Ravenna that were recently bought by Nebraska companies are running at capacity and investing in expanded capacity,” Sneller said.

As the second largest producer in the United States, Nebraska’s ethanol production makes a global impact. According to the U.S. Energy Information Administration (EIA), the U.S. exported more than 1 billion gallons of ethanol in 2016, an increase of 26 percent over 2015. EIA estimates net exports of ethanol to rise another 6 percent this year.

“We continue to see huge demand for ethanol in Asian and South American markets,” Sneller said.

Nationwide, the Renewable Fuels Association reported that in 2016, U.S. farmers harvested a record corn crop of 15.1 billion bushels and achieved a new record average yield of 174.6 bushels per acre. In turn, U.S. ethanol facilities produced a record 15.3 billion gallons of ethanol and 42 million metric tons of high-protein animal feed.

However, RFA President and CEO Bob Dinneen said, the current economic climate is tough for our nation’s farmers. He said demand has not kept up with supply, requiring corn growers to sell their commodity below their cost of production.

Net farm income fell to a seven-year low in 2016 and the aggregate value of crops hit its lowest point since 2010.

Dinneen said ethanol and the Renewable Fuel Standard had helped agriculture has weathered the storm.

“It is no exaggeration to say that the recent downturn in the farm economy would have been far worse without the ethanol industry’s stabilizing effects,” Dinneen said. “That is why the RFA has made increasing demand for ethanol here and abroad our top priority.”