Des Moines Register, IA
04-29-07
Biofuel fuels change in Iowa Falls
The changes seen here over the past 18 months could repeat across Iowa
JERRY PERKINS
REGISTER FARM EDITOR
Iowa Falls, Ia. — A modern-day alchemy is brewing on the banks of the Iowa
River, where two ethanol plants and a biodiesel refinery are turning corn and
soybeans into renewable fuels.
Blend those biorefineries with a livestock feed mill and Iowa Falls leaders say
they’ve got a potent elixir bubbling in Hardin County.
Biofuel producers, livestock feeders and crop producers have generated change
that could repeat in other cities across Iowa with new plants. There’s more jobs,
increased traffic, higher tax revenues, farmland values and corn prices, and more
sales on Main Street.
“I don’t know of another 12- to 18- month period that has brought more change to
our area,” said Daniel Stockdale, president of the Iowa Falls Area Economic
Development Group.
Iowa Falls, a city of 5,200, stands out because of its mix of biofuels and livestock
production, including two of the largest hog producers in the United States.
Those businesses represent a variety of ownership. A private company based in
Iowa Falls owns the Hawkeye Renewables ethanol plant; local investors own the
Pine Lake Corn Processors ethanol plant near Steamboat Rock; and
agribusiness giant Cargill owns the biodiesel facility.
Iowa Select Farms, headquartered in Iowa Falls, is the nation’s fourth-largest hog
production company. The third largest, Christensen Farms, based in Sleepy Eye,
Minn., owns a feed mill in the area.
The businesses compete for grain, but they also benefit from one another.
Crop farmers sell their corn and soybeans to the ethanol and soy processing
plants. The plants sell their byproducts to the feed mill. The feed mill mixes the
byproducts into feed for livestock. The livestock eat the feed and produce the
manure that goes back on the soil to fertilize future crops and the cycle starts
again.
Increased ethanol production has driven corn prices higher, creating tensions
between the booming biofuels industry and livestock production. But John
Miranowski, professor of economics at Iowa State University, said biofuel
production is helped in the long run by having a livestock industry nearby.
For example, he said, dried distillers grains, a byproduct of ethanol production,
make for high-protein feed that can replace corn in beef and dairy cattle rations .
“We might see more livestock jobs in Iowa rather than fewer as we make more
progress integrating ethanol with livestock feeding,” Miranowski said.
Jeff Hansen, founder of Iowa Select Farms, sees a downside: Higher prices for
corn have raised the cost of livestock production.
“It’s definitely a huge concern for our business,” said Hansen. “It will be very
good for rural Iowa with higher farmland values, but if we lose any part of the
livestock industry, that’s a negative.”
Among the other changes in Hardin County:
Jobs. Jim Johnson, a Hardin County supervisor, said the county granted tax
breaks to both the Pine Lake and Hawkeye Renewables . The jobs the plants
have provided and the higher commodity prices have made the tax breaks
worthwhile, Johnson said.
Pine Lake employs 31 people at an average wage of $15 an hour. Hawkeye
Renewables employs 49 people with an average of $24 an hour, which includes
corporate staff.
Cargill’s biodiesel plant has 11 and an average hourly wage of $19.
Hansen of Iowa Select points out that the plants have created far fewer jobs than
Iowa Select, which employs 900 people.
On the farm. Corn and soybean prices have risen, but not all of that money has
stayed on the farm, said Darwin Miller, Hardin County Extension education
director.
“A lot of farmers had at least two-thirds of their 2006 crop sold before corn prices
took off, so they didn’t get to take advantage of the price increase,” Miller said.
“Where I really think we are going to see the benefit is when the 2007 crop is
sold at what should be higher prices .”
One of big changes caused by the biofuel boom is the rapid increase in farmland
values.
The best farmland in Hardin and other central Iowa counties shot up 14 percent
in the year ended March 1, according to the Iowa Farm & Land Chapter #2
Realtors Land Institute.
Rising farmland prices increase the net worth of landowners and the resulting
higher rental rates for farmland are good for landlords.
But more expensive farmland and higher land rental rates are barriers for young
and beginning farmers.
Traffic. In town, trucks serving the ethanol and biodiesel plants and the feed mill
are clogging Oak Street, the main north-south route through Iowa Falls that is
U.S. Highway 65 outside the city limits.
Rocco Lavalle, mayor of Iowa Falls, said 450 trucks pass through Iowa Falls a
day.
Darrel Steven Carlyle , city manager of Iowa Falls, said the city is developing a
truck bypass route to the ethanol plant, feed mill and soy plant that will relieve
South Oak Street of some of the truck traffic.
Johnson, the Hardin County supervisor, said road repairs quickly eat up the
county budget.
“There are 200 bridges in Hardin County and 1,100 miles of roads and we’re
seeing tremendous pressure” from farm trucks and equipment, manure haulers
and trucks carrying hogs, he said.
Tax revenues. The economic activity has boosted taxes collected by the city,
Carlyle said.
Carlyle said that Hawkeye Renewables pays almost $400,000 a year in property
taxes to Iowa Falls .
Sales tax revenues increased 16 percent in the past three years to $488,800 in
the fiscal year ended June 30, 2006, Carlyle said. Hotel-motel tax also jumped
during the past two years.
The money has gone toward recreation projects and economic development,
including $15,000 for improvements at the airport and for a city celebration.
“You can see the domino effect of all this,” Carlyle said.
Main street. The biofuels boom also has spilled over to local businesses, said
Dale Howard, an Iowa Falls car dealer.
“It’s unbelievable,” he said. “We’ve seen a 10-15 percent increase in sales and
service this year. It’s hard to say if it’s all from higher corn and soybeans prices
and the ethanol and biodiesel plants, but that money just turns over so many
times in the community.”
Greg Lofstedt, superintendent at Cargill’s soybean plant, said Iowa Falls has
changed considerably since the farm crisis 25 years ago.
“In the eighties, downtown had vacant store fronts and there was not much paint
on the houses in some parts of town,” said Lofstedt. “Now the business district is
back, restaurants have flourished and the motels are full from construction
projects.”