Ethanol Producer Magazine, ND
11-14-07
Keeping the Capital
By Nicholas Zeman
A few years ago, Coon Rapids was selected by the state’s residents as one of the most desirable places to live in Iowa, according to Dennis Molitor, director of Iowa State Univ ersity’s (ISU) Carroll County agricultural extension service.
This small town in Carroll County has been going through a steady period of growth and development since then, partly because of Poet Biorefining-
Coon Rapids (formerly Tall Corn Ethanol), located on the outskirts of town.
The ethanol industry’s impact on this rural area is driving up land prices. Is that a positive or a negative for area agriculture? “It really depends on what side of the coin you’re on,” ISU Agricultural Economist Dan Otto says. “If you’re a new farmer trying to break in, then it really drives up your capital expenses. If you’re an established owner of 800 to 1,000 acres, then your net worth has risen dramatically all of a sudden. So it’s creating a lot of wealth very rapidly, but also some barriers to entry.”
Another two-sided impact is evident in the livestock production market. The dairy and beef industries are experiencing a comeback through the use of distillers grains produced by ethanol plants. However, the poultry and swine industries have complained about high feed corn prices caused by ethanol plants’ demand of corn feedstock. Those animals have a smaller recommended distillers grains inclusion rate compared with cattle.
There is always going to be competition for raw materials from various entities.
The good thing about the ethanol industry in Iowa is that it is allowing those raw materials to stay in the state. “If it wasn’t for the ethanol plant, a lot of farmers in the Coon Rapids area would be [sending their] corn to an elevator and from there onto a railcar to the gulf, where it’s directed to overseas markets,” Otto says.
Although some people believe that growth of a particular community relies on an influx of dollars from outside sources, others say outside investment only leads to capital flowing away from local economies. Poet Biorefining-Coon Rapids is proving both opinions correct by keeping its capital local. Formed on the cooperative model, the plant gathered money from farmers in the area, most of whom were contracted to deliver 5,000 bushels of corn each year as part of their buyin. “I think we should go to extraordinary lengths to keep investment local [for development projects],” Molitor says. “Keeping the capital here is one of the prime motivators of p rojects like this. If we’re sending the profits out of state, I just don’t see how that is good for us.”