Work progresses at new ethanol plant in Putnam County

CLOVERDALE -- With gasoline prices continuing to take a toll on consumers' wallets, the hope for relief in the form of alternative fuels is growing all the time.

And before long, Putnam County could find itself on the cutting edge of the shift toward alternative fuel sources.

In Cloverdale, construction is moving forward on a $150 million ethanol plant that will have the capability of producing 72 million gallons of E85 ethanol per year, the alcohol-based fuel derived from corn or other crops.

The owner of the plant is Altra Indiana LLC, a subsidiary of California-based Altra Inc., which owns a total of five organic fuel plants across the country, according to its website.

Representatives from Altra declined to speak to the BannerGraphic, but the contract manager for the Cloverdale project, Dennis Lods of Indianapolis-based F.A. Wilhelm Construction, said the plant is scheduled for completion in April 2008.

Lods estimated the project is currently 12 percent complete.

"Things are really slow right now," he said. "The site contractor is about six weeks behind schedule. We've had a lot of problems. The weather has been bad."

Construction began on June 28, 2005 with a ground-breaking ceremony attended by Gov. Mitch Daniels and other officials. At the time, the plant was owned by Putnam Ethanol LLC, now known as Hartford Bio-Energy LLC.

Hartford's chief financial officer, Jim Zegar, said Altra became the plant's owner in September. The sale was made because Altra thought the location was valuable and made a good offer to buy the project, he said.

"Our site in Cloverdale was perfect for them and their business plan," Zegar said. "The reason they were interested in the Cloverdale site is the East Coast needs a lot ethanol. We would sell our ethanol to the East Coast cheaper than anybody else."

Zegar said Hartford is still working with Altra through ownership transition, and that Altra has said it intends to continue with the original plans for the project made by Hartford. Lods said the change in ownership did not affect the construction plan or slow down the schedule.

In addition to ethanol, the plant will market other goods made as by-products when the corn is processed. Zegar said these include dried distiller's grain, which can be mixed with corn for livestock feed, and carbon dioxide gas for carbonation in drinks.

Cloverdale is by no means the only Indiana community swept up in the ethanol boom.

According to Ann Delchambre, extension educator for Putnam County's Purdue University cooperative extension office, there are currently 22 proposed or completed ethanol plants in the state.

"With fuel prices the way they are, they are still really high whether we want to believe it or not," Delchambre said. "With the explosion of everybody wanting off foreign oil, we're looking at a lot of alternative fuels, not just ethanol."

Because most of the ethanol in the United States is produced from corn, its growing popularity has driven up the crop's demand and in turn Midwestern farmers' profits, Delchambre said. She expects this trend to continue.

Putnam County corn grower Kim Ames said the Cloverdale ethanol plant will benefit the area in many ways, including by buying corn from local producers.

"When you're talking about a place buying 35 to 40 million bushels that's 15 miles away, that's really nice," Ames said. "They're using a domestic product we can grow here and replacing an imported good."

The plant will also create jobs and contribute to the county's tax base, he said.

Ames said demand for ethanol has already raised corn prices nationwide, and the Cloverdale plant will contribute to that trend on a smaller scale locally.

"(Corn) is probably 75 cents to $1 more than it would be without ethanol," Ames said.

Roger Bailey, executive director for the Putnam County Farm Service Agency, said he expects local corn prices to increase 7 to 10 cents once the Cloverdale plant is up and running.

Yet Delchambre said increased corn prices could ultimately have some negative consequences.

"I think we're going to start seeing a myriad of interesting problems in the next few years," she said.

Among those problems is the effect rising corn prices will have on livestock farmers who must buy corn to feed their animals, she said.

. "At around $3.50 it costs too much for hog farmers."

Bailey said local livestock farmers could be hurt by the Cloverdale plant's impact on corn prices, but that it is more of an issue for large-scale livestock producers who buy all their feed. Most Putnam County livestock producers also grow grain to feed their animals, he said.

"Around here, (livestock farmers) are not purchasing corn for feed," Bailey said. "There does become a point where they have to look at alternative income, and they have to look at is it more profitable to quit raising cattle or hogs and just sell corn."

Delchambre also said if corn prices become high enough, farmers may quit rotating corn with other crops and instead grow corn every year to increase their profits, which is unhealthy for the soil. Bailey said he anticipates about half of local farmers switching solely to corn production if prices increase.

Ames said he doesn't see continuous corn growth as a problem, because extra soil care can compensate for not rotating crops.

"I'm not going to say it's worse for the soil," Ames said. "It's a management issue and an input issue."

The national debate over increased ethanol production also has some officials worried that corn made into fuel will eventually diminish the supply of corn for food. Here in Putnam County, Ames said he won't quit selling to his traditional buyers when the Cloverdale plant is complete.

"Some of our crop will go there, but not all of it," he said.

As much of a benefit as ethanol will be to drivers and farmers, it alone can't replace gasoline, experts say.

"If ethanol is really going to have a dramatic effect, there will have to be other sources of ethanol besides corn," Bailey said. "That technology is being developed right now. They can do it; it's just not cost-effective right now."

"(Ethanol) is not the silver bullet, because we can't produce enough to come close to our daily [fuel] consumption," Delchambre said. "But it's a start."