A hope-filled ag workforce has had one prayer answered with rain.
Now, many wait optimistically to see commodity prices rise.
With grain price predictions looking grim, one ethanol industry leader reminds folks of the phenomenal influence the fuel has had on the economy of the state and the impact that changes to the Renewable Fuel Standard will have in the future.
At one of the 16 ethanol facilities across South Dakota, development of the ethanol industry continues to be a mainstay in the state’s economy. Jim Seurer, CEO of Glacial Lakes Energy, said.
“It’s been a good year for us and all other area ethanol plants,” Seurer said in a phone interview. “It’s a good time to be reminded of why the plants were built. It provides a good demand for corn within the state. The price is not where farmers need it or want it to be. Having the ethanol market has shored up the price. For those who invested in the plants, it’s another way to make up for the lower commodity prices, which is the purpose of the ethanol industry.”
According to the South Dakota Corn Growers Association, the state ranks sixth nationally when it comes to ethanol production and produces an average of 1 billion gallons each year. The industry employs 1,900 South Dakotans. The state’s ethanol industry has an overall annual economic impact of $3.8 billion, according to the group.
Because of positive margins at Glacial Lakes, the company, with plants in Mina and Watertown, announced in April a 10-cent dividend to member-owners. Seurer said that he’s confident it could declare another 10-cent dividend by the end of the year. That would result in a total distribution of $18.6 million in cash to investors, and will give them income that they are not realizing with current corn prices.
“This really validates the value-added direction of these ethanol plants,” Seurer said. “Our investors recognize that the ethanol plants are a source of value that can be added to corn production. The plants were built with that purpose in mind, to keep the value here in South Dakota without shipping it out of the area.”
Renewable Fuel Standard
The battle over the Renewable Fuel Standard continues to be a limiting factor for ethanol. The Renewable Fuel Standard program was created in the Energy Policy Act of 2005 and established the first renewable fuel volume mandate in the U.S. The mandate did a lot to propel ethanol use. It was changed in 2007 to increase the volume of renewable fuel required to be blended into transportation fuel from 9 billion gallons in 2008 to a goal of 36 billion gallons in 2022.
The law is on the books, but Seurer said the Environmental Protection Agency continues to tamper with and tinker with the law. He is frustrated because the EPA is not enforcing the law passed by Congress.
Announced in May, EPA’s proposed blending targets for 2015 and 2016 fall back on the 10-percent ethanol — or E10 — “blend wall.”
If the changes are finalized, the ethanol industry has potential to lose out on the sale of billions of gallons. According to Seurer, EPA’s new recommendations result in 3.7 billion fewer gallons of biofuel sold in 2014 through 2016 versus the standards set by Congress.
The EPA is accepting public comments about the changes through July 27, and more information is available at 1.usa.gov/VG21E6 online.
Seurer said the ethanol industry has a lot of potential to produce more of the biofuel, but it depends on new markets for ethanol, such as increasing the required Renewable Fuel Standard.
Emerging markets are created when countries move from a 7-percent ethanol blend to a 10-percent blend or from a 3-percent blend to a 5-percent blend.
The U.S. exported more than $2 billion dollars of ethanol last year, making it the world’s largest exporter of ethanol.
“There remains so much potential,” Seurer said. “Ethanol offers the cheapest form of octane today. Higher-compression engines need the octane to get the better gas mileage. Those engines may require an E30 blend.”
Predicting that the oil industry is going to fight any increased use tooth and nail, Seurer said that to have better gas mileage, vehicles will need to use the cheap source of octane: ethanol.
Blender pumps offer a way for consumers to make the choice to use higher blends of ethanol when filling their tanks. On the same day the limited Renewable Fuel Standards was announced, the Department of Agriculture announced the availability of up to $100 million to help improve infrastructure for delivering ethanol to cars.
Seurer said the industry is seeing some progress in getting more blender pumps installed. More of the major convenience stores are interested, he said. He believes 80 percent of the vehicles on the road can operate on E15 or E30 without any harm, and studies by the Renewable Fuels Coalition back him up.
Back on track
Shipping ethanol was a nightmare last year, but transportation companies responded with equipment and crews, according to Seurer. The slowdown in the Bakken region of North Dakota combined with more favorable weather has resulted in turn times being reduced to the level they were two years ago. A turn time is the time it takes to get to the shipping point and back to the ethanol facility.
“When we began years ago, we worked to add value to the corn before shipping it out of state,” Seurer said. “That has worked. Now we just need the cooperation on the market side of things to move the finished product.
“Our industry wants to go to E15 across the board,” he said. “That would raise demand from 14 billion gallons (with E10) to 21 billion gallons and increase demand further” and hopefully bump up corn prices.
This article was written by CONNIE SIEH GROOP from American News, Aberdeen, S.D. and was legally licensed through the NewsCred publisher network.