Ethanol continues to be a driving force in Nebraska’s economy, affecting a sizable portion of the state’s business sector.
This, according to a recent impact study released by University of Nebraska-Lincoln economists. The report examines the economic impact of Nebraska’s ethanol industry between 2015-17. Authors are UNL agricultural economics professors Kathleen Brooks, Tim Meyer and Cory Walters, and Eric Thompson, economics professor and Bureau of Business Research director,
Showing a 23 percent production capacity increase since 2014, ethanol production was 2.558 billion gallons per year as of 2017, with 1,453 full-time employees at 24 facilities. That figure represents an increase in production capacity of 48.1 million gallons annually and an additional 152 full-time employees compared to 2014.
The growth reflects the industry’s substantial and continued annual impact on the local labor market. Factoring in both direct and indirect jobs created, the total labor income impact was $275 million earned from an estimated 3,509 jobs in 2016, an average annual earnings of $78,300. Ethanol plant jobs provide significantly higher wages compared to other manufacturing positions and are uniquely located in rural communities.
“There s enormous potential for biofuels to continue to strengthen the economic health of Nebraska through bio-based innovation and international trade,” said Sarah Caswell, Nebraska Ethanol Board administrator. “The state sees what economists describe an economic ‘bounce’ when we take advantage of the added value when grain is converted to food, fuel, fiber, renewable-chemicals and bioproducts.”
When ethanol excels, so, too, does the price of corn for farms in close proximity to plants. Farmers situated near ethanol plants producing 220 bushels of corn per acre earn an additional $11.44 per acre each year.
And while ethanol sales within state lines have been steady, export sales have made Nebraska one of the largest exporters of bioenergy in the world. About 94 percent of the product now is shipped out of state, along with 51 percent of the co-product dried distillers grain produced in 2015 and 44 percent of DDG produced in 2016.
Wet and dried distillers grains produced at ethanol plants are used as animal feed.
Yet for all its potential, the industry still hasn’t realized the type of success farmers and producers have hoped for. In a down ag economy, the value of production for ethanol and co-products was lower between 2015-2017 compared to previous years. And while production did increase in 2016 and 2017, a decline in price led to reduced overall production values.
Duane Kristensen, general manager of Chief Ethanol Fuels Inc. near Hastings, still is optimistic about ethanol’s future, even as plants struggle to stay the course in a less-than-thriving ag environment. That the state now is beginning to invest in a higher blend E30 product to power some of its vehicles is but one sign that that fortunes seem likely to turn in the industry’s favor sooner rather than later.
That ethanol offers environmental advantages is a given. Countries with poor air quality such as Mexico, China, and India could benefit mightily from a switch from petroleum-derived MTBE products — which were restricted more than a decade ago in the U.S. because of their high content of carcinogenic contaminators — to more echo-friendly ethanol blends.
But while the opportunities are ripe for the picking, current conditions are making it difficult to make the financial investments necessary to make the advances happen. And as Kristensen readily admits, the going is becoming more and more difficult as suppliers look to stay afloat in an uncertain marketplace.
“When does the tide turn?” Kristensen said. “It’s difficult for anybody to see right now. But there are a number of things that could happen. Like a lot of agriculture, we’re trying to weather the storm.
“We’re optimistic on the industry because there are so many benefits for ethanol fuels. Ethanol fuels are a vital and integral part of our fuel supply today. By adding octane and helping environmental aspects, we can improve our air quality.”
With the automobile industry building turning to engines that pollute less, ethanol will look to become the eco-friendly choice among blended fuel options. Andrew Wheeler, the latest director of the federal U.S. Environmental Protection Agency, has pledged to uphold the Renewable Fuel Standard, giving E15 the potential for an increase in demand. Some news on that score was made on Tuesday when EPA proposed a rule extending a Reid Vapor Pressure waiver to allow year-round sales of E15. Currently, the waiver is valid only eight months out of the year due to concerns about smog pollution in the summertime.
The proposed rule change now is subject to a public comment period. EPA is planning a public hearing for March 29.
“We’re optimistic these issues can be resolved,” Kristensen said. “There are more efficient engines being built today — four-cylinder, high-compression, turbo-charges engines are using the higher octane — and that’s what ethanol provides, a clean burning high-octane fuel for the future.
“If you design engines to take advantage of the attributes, that’s when the win-win comes in. With engines that can effectively utilize the octane, we see the benefit from a mileage and environmental standpoint.”
Ex-Fortenberry aide succeeds Kliment, who helped establish agency
The Nebraska Grain Sorghum Board recently announced Nate Blum as its new executive director.
Blum is a Nebraska native, an alumnus of the University of Nebraska-Lincoln, and a graduate of the Nebraska LEAD Program. He previously specialized in agricultural policy and outreach, serving Republican U.S. Rep. Jeff Fortenberry in Nebraska’s 1st Congressional District.
The retiring executive director, Barbara Kliment, said she has been mentoring Blum since his hiring in February. She said he manages his family farm, giving him a unique perspective to bring to the board.
“He brings a nice background to the position,” she said. “He’s a quick learner and ready to fly on his own.”
She said she isn’t going to try to influence Blum as he takes on the new role, but will remain a resource he can turn to if needed.
“We’re going to try to look forward,” she said. “It’s an exciting time for sorghum to have a changeover in staff.”
Kliment, who has served in the Sorghum Board position for the 38 years, said people would be surprised by the number of details involved in managing a state agency.
She is planning to spend as much time in retirement as possible with her grandchildren, who live in Grand Island and Pittsburgh.
“We fully intend to exercise our right as grandparents to spoil the grandkids,” she said. “They are just growing up way too fast.”
Kliment is the founding director of the Grain Sorghum Board, which was created by action of the Nebraska Legislature in 1981 and became a free-standing state agency on July 1, 1982. Using proceeds from state and national sorghum checkoff fees, the seven-member board oversees sorghum market development, research, promotion and education, as well as federal legislative affairs important to sorghum farmers in Nebraska.
During her time as director, she had the opportunity to host a number of international trade teams visiting Nebraska, as well as travel to the Middle East, Asia and Mexico on trade missions. Between 30 and 60 percent of the sorghum grown in Nebraska is sold to international markets.
“This planet really is very small,” she said. “Each and every one of us have the same basic needs. Nebraska, being a primarily agricultural state, has such a tremendous opportunity to meet the needs of a hungry world.”