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April 16, 2003
Ethanol plant gives local corn revenue $4.12 million boost
When Missouri's first corn ethanol plant opened near Macon in 2000, one of the goals was to increase the value of local corn. A new University of Missouri study evaluating the plant's impact on local prices has found that annual corn revenues in the nine-county area surrounding Northeast Missouri Grain, LLC, (NEMO Grain) have increased by $4.12 million.
Christin Hans, an agribusiness management student who conducted the study, determined both the direct and indirect price impacts that NEMO Grain had on the local corn market. To do so, she compared local and regional prices in addition to the direct higher price NEMO paid to producers.
"On average, NEMO Grain paid nine cents more per bushel. The plant receives about 8 million bushels a year, so the total direct price impact is about $720,000 annually," she says.
To determine the indirect price impact, Hans compared the price paid for corn produced in the nine counties around Macon to the price paid at a Kansas City elevator whose prices would not be influenced by the ethanol plant. Her analysis indicated that after the ethanol plant opened in May 2000, corn producers in the surrounding area received about 10 cents more per bushel, resulting in an annual indirect price impact of about $3.4 million for the 34 million bushels produced.
"The revenue increase of $4.12 million can be attributed to the price premium the ethanol plant pays for corn and the increased competition that results in the surrounding area," Hans says.
According to a study conducted in 2001 by Donald Van Dyne, MU professor emeritus of agricultural economics, the Macon plant increased total employment and economic benefits by about $14 million. His study, which the Missouri Corn Growers Association and the Missouri Corn Merchandising Council commissioned, estimated the total direct benefits represented about a 50-cent per bushel increase
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