Will farmers benefit from Shelbyville's ethanol plant? Maybe

POET LLC announced last week that it will build an ethanol production plant costing nearly $160 million, according to a news release.

When brought online in spring 2020, the plant will produce 80 million gallons of ethanol a year from $110 million of corn purchased from farmers within a 30-mile radius. The plant will feature environmental controls that eliminate discharge of processing water. 

Ethanol is a renewable fuel made from various plant materials. More than 98 percent of U.S. gasoline contains ethanol, typically E10 (10 percent ethanol, 90 percent gasoline), to oxygenate the fuel and reduce air pollution, according to the U.S. Department of Energy Alternative Fuels Data Center website.

"Ethanol is also available as E85 (or flex fuel), which can be used in flexible fuel vehicles, designed to operate on any blend of gasoline and ethanol up to 83 percent. Another blend, E15, is approved for use in model year 2001 and newer vehicles," the website explained. In the United States, 95 percent of ethanol is produced from the starch in corn grain.

“POET’s project provides jobs right here in Shelby County, but its indirect effects will extend well beyond that,” said Brian Asher, Shelby County Development Corp. executive director. “This boosts income for farmers, expands the tax base and circulates new dollars across the state economy.”

Two area Purdue Extension educators in agriculture and natural resources reacted to the news.

"There's all kinds of possibilities" about what this proposed plant could do for local producers, said Ripley County educator and Purdue Extension director David Osborne. He recalled when corn was priced low six or seven years ago, there were 10 ethanol plants slated to be built in Indiana, but some never materialized as prices rose.

He reflected, "When corn prices are low, the way they are now, ethanol looks really, really good." If they go back up, ethanol is not as economical for producers to make, so plants could go on- and offline, Osborne figured.

"Any time we have a market for local corn it won't hurt anything. It won't necessarily mean those farmers are going to see higher prices because there's another market for their corn."

According to the director, some ethanol plants contract with area farmers about the specific types of corn to plant. Those contracts a lot of times are open-ended, but the farmer can say, "'This is the price I want on today's date.'"

"My overall feeling is farmers in our neck of the woods don't have a problem moving and selling the grain they produce. Farmers are still price takers, not price setters." Ethanol plants won't change that, he believed.

Osborne concluded, "It's always a positive when we have U.S. companies that are gearing up to use more and more corn ... supply and demand is what sets prices in the commodity market."

Franklin County educator Mary Rodenhuis admitted, "When I heard about the POET ethanol plant, I was happy there was another market opening up for producers. However, in the news release, they stated they would be taking corn from a 30-mile radius from the plant, which would exclude producers in Franklin County. Hopefully this is just for the start of ethanol production and our producers will be able to utilize this market in the future." 

She cautioned area farmers looking to sell corn to the future facility, "In making ethanol, POET will be more stringent on corn coming in with mycotoxins, so the corn produced needs to be cleaner. This is because a by-product of ethanol production is dried distillers grain (DDGS). DDGS is a great livestock feed, but when the ethanol is produced, the starches are removed in the fermentation and what is left is everything else in the kernel and all are concentrated, so the mycotoxins in the corn is more concentrated. This is an issue for livestock feeding on the DDGS as the mycotoxins will make livestock sick."

The site, at County Road 300 North and Tom Hession Drive, is west of Indiana Grand Racing & Casino and approximately one mile southwest of Interstate 74.

Shelbyville is annexing the location. City officials also are assisting with land acquisition and infrastructure. A tax abatement proposal is under review by POET.

"Local farmers will benefit by not having to haul their corn long distances to receive top prices," Asher said. Not only will farmers save time and wear and tear on their trucks, but truck traffic will be reduced on roads leading to other facilities.

Forty-five full-time jobs will be created in addition to 275 temporary construction jobs. Hiring for full-time positions will begin in the spring.

Headquartered in Sioux Falls, S.D., POET operates 27 starch facilities, including four in Indiana. Existing Indiana plants are located in Alexandria, Cloverdale, North Manchester and Portland, the news release stated.