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Posted on  

January 6, 2004

Ethanol plant nears building stage

By Ann Pierceall
Herald-Whig Staff Writer

LADDONIA, Mo. — After three years of planning, ground is expected to be broken this year on a $35 million ethanol plant that could serve a large portion of Northeast and Central Missouri.

The plant will be built on the north side of Laddonia, which sits just south of the Ralls-Audrain county line. It is expected to produce 20 million gallons of ethanol a year.

East Central Ag Products Inc. (ECAP), the non-profit group working to develop the plant, is still negotiating some financing.

“We expect something soon, very soon,” said Roger Young, ECAP president and an Audrain County commissioner.

ECAP needs to raise about $1.6 million in equity needed to get a low-interest loan.

“We’re still taking in money,” Young said. “Mostly it’s coming from farmers. They’re buying securities, like stock, into the ethanol plant.”

Between the farmers — about 535 area farm families are involved — and other stockholders, about $13 million has been raised.

ECAP recently received a $500,000 grant from the U.S. Department of Agriculture.

“It’s a working capital grant, which basically means the funds can be used to purchase inventory, or for salaries — that sort of thing. It can’t be used for building costs, or equipment costs,” said Nathan Chitwood, USDA community and business programs specialist in Columbia.

The grant will go into effect as soon as ground is broken.

Chitwood said it is a dollar-for-dollar matching grant. The goal of the USDA is to boost renewable energy production and increase producer income and economic development. Chitwood said the dollars generated by the plant through jobs, development and taxes will “cycle through the agriculture community several times over.”

It’s that payback that the farmer-owners hope to realize. According to the Missouri Corn Grower’s Association, that could easily become a reality given the success of the two ethanol plants already in production in Missouri.

Jamey Cline, director of value enhancement for the association, said a study the association commissioned two years ago found a need for five 30-million to 50-million gallon ethanol plants across the state. The Laddonia area was one with a lot of corn production that could benefit from such a plant.

Cline said the plant’s benefits are two-fold — economic development and increased value to producers.

He said the two plants currently producing ethanol in Macon and Craig have brought in $172 million in added economic activity and $17 million each year in federal and state taxes. Those two plants process about 8 percent of Missouri’s corn crop. Four plants — a fourth is proposed in Malta Bend — are expected to use about 15 percent of the crop.

The good news for producers is that corn growers can expect to see a projected 11-cent per bushel increase on their product when sold to the ethanol producers.

Young said for those who are ECAP shareholders, the return will be even better because of the dividend returns.

The energy bill now pending in Congress calls for the use of 5 billion gallons of ethanol by 2005 — about double of what’s used now.

Ethanol is touted as the affordable alternative to MTBE, a component of fuels that has been determined to cause cancer.

“The main thing is we’ve got to build enough plants to keep the folks mixing it happy. We’ve got to keep the demand and the supply equal,” Young said.

 

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