SOUTH DAKOTA STRAIGHT TALK

Straight Talk Commentary - While another post on our National Energy Policy or lack there of is in order, I have wanted to weigh in the recent dispute in Turner County over the competing Ethanol Plants.

The reason that we have the Corn Check Off and the generous government subsidies of Ethanol is to raise the price of corn. Corn of course is one of the cornerstones of our agricultural economy. The contest between the plants is ostensibly about some environmental concerns but in fact the battle is about the profitability of the plants, one that seems to want to avoid higher raw material costs, in this case corn. I applaud the profit motive and believe that competition is good for business and for consumers. The owners of these plants for the most part are the farmers. It seems at least the Great Plains Ethanol group is in some part a little more concerned about protecting their profits from the plant rather than creating additional demand for corn and raising it's price.

As the following article points out – there maybe enough raw material in any event. Because of new mandates for Ethanol use, the current price if sustained should guarantee even larger profits despite what is hopefully even higher corn prices.

Not Enough Corn For Two Ethanol Plants?

Tri-State Neighbor

By Wendy Sweeter

April 26, 2006

In the last month, two ethanol entities brought their disagreements to a head.

Great Plains Ethanol, located near Chancellor, S.D., and Millennium Ethanol near Marion, S.D., had a judge rule on what would be permitted.

Just to review for those of you not too involved with the issue. The Turner County Board of Adjustments granted a conditional-use permit for the proposed Millennium Ethanol plant. Great Plains Ethanol challenged the decision in court, saying Millennium Ethanol would be too much of a drain on local ag resources.

A judge ruled earlier last week in favor of Millennium Ethanol, saying that he did not have the legal authority to stop the plant.

Talk has been going around that Great Plains does not want Millennium Ethanol close to them because there isn’t enough corn for two 100-million gallon plants.

Let’s look at the facts on corn production in southeast South Dakota. First off, though, South Dakota ranks 6th in the nation for corn grown for grain.

According to the National Ag Statistics Service Web site, www.nass.usda.gov/, corn production for nine southeastern South Dakota counties was as follows for 2005:

McCook County - 11,340,000 bushels;

Minnehaha County - 23,353,000 bushels;

Bon Homme County - 5,993,000 bushels;

Clay County - 11,731,000 bushels;

Hutchinson County - 11,777,000 bushels;

Lincoln County - 20,170,000 bushels;

Turner County - 16,876,000 bushels;

Union County - 19,982,000 bushels;

Yankton County - 8,353,000 bushels.

The total for these nine counties came to 129,575,000 bushels.

According to “Questions & Answers About Ethanol: Fueling South Dakota’s Economy Today & Tomorrow,” a report put together by the South Dakota Corn Growers Association, South Dakota Corn Utilization Council and American Coalition for Ethanol, a bushel of corn yields approximately 2.7 gallons of ethanol.

With almost 130 million bushels of corn produced in the counties surrounding the two ethanol sites discussed above, that would be 351 million gallons of ethanol produced - plenty for two 100-million gallon plants.

Of course, not every farmer in this area will market their corn to the ethanol plants. Even if two-thirds of them did, there would still be enough corn to produce 200 million gallons of ethanol.

Keep in mind the amount of corn acres varies from year to year along with other factors that may affect yield, including little rain, hail, wind and other naturally occurring challenges.

Two 100-million gallon ethanol plants should generate more competition for farmers’ corn in southeast South Dakota. More competition should mean higher corn prices for farmers, something we all should want.

Great Plains can still appeal the judge’s decision to the state’s Supreme Court. I hope they make the decision not to. As one producer investor of both plants told me, it would be like suing himself. And that just doesn’t make sense.