The Nebraska ethanol industry had an economic impact of about $5 billion last year, according to the first research on the topic to include the effect of the motor fuel’s valuable byproducts.
The report also said the industry is employing 1,300 people at an average wage that is 21 percent higher than the state’s average manufacturing wage.
“Economic Impacts of the Ethanol Industry in Nebraska” was prepared by the University of Nebraska’s Department of Agricultural Economics and the school’s Bureau for Business Research. It is scheduled to be formally released today at a press conference at the university.
Nebraska’s ethanol industry produced 9 million gallons in 1985 and has grown to be the second-largest in the country, behind Iowa’s, churning out 1.8 billion gallons last year. In addition to producing motor fuel from corn, the state’s 24 plants also produce corn oil and a cattle feed that is a leftover from the ethanol-distilling process know as distillers grain. The largest Nebraska plant by payroll, the Archer Daniels Midland complex in Columbus, employs 285 people.
When compared to other Nebraska economic products, ethanol production values beat some old standbys and rival others. Production value is calculated by multiplying annual production quantity by the average annual sales price.
The report said that last year the production value of ethanol, distillers grain and corn oil was $4.95 billion. By comparison, corn production value was $6.6 billion, cattle sales were $10.5 billion and soybean production value was $3.5 billion.
Along with the production value of ethanol and associated products, other direct impacts were wage and salaries of $71 million, owner
income of $34 million and state property taxes of $13 million.
Indirect and induced impacts, which measure the multiplier effects, such as how the paychecks of ethanol plant workers spread through the economy, totaled $646 million. The industry, the report said, supports about 3,300 indirect jobs.
The overall economic impact — $4.9 billion of output and other direct effects plus the $646 million of indirect effects — doesn’t add up to more than $5 billion because about 4 percent of the ethanol and byproducts produced in Nebraska last year was not exported and were discounted in the economic analysis.
Other details of the findings include:
» For the past five years, production value for ethanol and dried distillers grain with solubles ranged from slightly under $4 billion to more than $6.6 billion, with the last three years averaging close to $5 billion per year.
» Nebraska ethanol plants shipped 96 percent of their production out of state last year, making the state one of the largest biofuel exporters.
» In 2014, the ethanol industry contributed $41 million in indirect business taxes to Nebraska.
“Spent wages and salaries become revenue for businesses which provide household goods and services, such as grocery stores, auto dealers, gasoline service stations, retail outlets, health care providers, insurance agencies, restaurants, and other recreation and entertainment businesses,” the report says. “The total economic impact is the sum of the direct, indirect and induced economic impacts ... collectively known as the multiplier impact.”
The report identified carbon dioxide and corn oil as expansion opportunities for the state’s plants.
One-third of the weight of a bushel of corn is converted into carbon dioxide during ethanol production, and that is a salable byproduct. CO² is used in food processing and beverage production and to stimulate oil and natural gas wells.
Also, corn oil can now be inexpensively produced alongside ethanol after the emergence of new technologies in that field. The report said most Nebraska plants can now produce corn oil and that “demand continues to be strong in the food, feed and biofuel sectors.”
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