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Ethanol plays vital role in Indiana economy

A recent study, funded by the Indiana Corn Marketing Council shows the ethanol industry plays a vital role in the state’s continued economic success.  Ken Parrent, director of biofuels for ICMC says in 2014 the ethanol industry contributed nearly $1 billion to the state’s economy.

In addition, he tells Brownfield, it is a job creator.  “They directly employ 500 people at the 14 ethanol plants,” he says.  “For each job created directly at the plant, it creates about 7 jobs elsewhere in the economy.  In total – more than 4,000 jobs are created by the ethanol industry here in Indiana.”

And he says, the industry is growing.  “We went from 900 million gallons produced in 2013 to slightly more than 1 billion gallons produced in 2015,” he says.

Indiana currently ranks 4th in terms of ethanol capacity and because some plants production was idled, Parrent says Indiana ranks 7th in production.

But, he says, as those plants come back online, he anticipates Indiana moving up in the production ranks.

Some other highlights from the survey:

Job Creation – The ethanol industry created 4,146 new full-time jobs within Indiana. The industry directly employs 526 individuals and 6.88 additional jobs are created within the state for every direct job. This is a total employment multiplier of 7.88.

Contribution to Indiana’s GSP – The ethanol industry contribution to Indiana’s GSP is $934 million. This is limited to the Indiana ethanol industry – it does not include the economic impact that the overall U.S. ethanol industry has had on corn prices, farmer’s income, and farmland appreciation.

Economic Activity or Sales within Indiana – The ethanol industry generated $2,881 million in ethanol, DDGS and corn oil sales in 2014. This in turn generates $739 million in additional economic activity across other sectors and households for a combined economic activity totaling $3,620 million.

Household Income – The increase of income to households directly or indirectly linked to ethanol production, including the impact farmers receive from a higher basis is $207 million. Induced impacts of $108 million provide for a combined total impact on household income in 2014 of $315 million.

State and Local Taxes – The ethanol industry generated approximately $44 million in state and local taxes in 2014. A large portion of these taxes are property and sales tax.

Cropland Appreciation – Indiana’s cropland prices increased by an average of $52.50/acre, resulting in an equity increase of $635 million for farmers and rural residents. If these croplands were sold, farmers/landowners will realize excess capital gains of $635 million just due to Indiana’s ethanol industry.

Ethanol Consumption and Fuel Cost Savings to All Consumers – Indiana consumed 314 million gallons of ethanol in 2013. Of this ethanol demand, 13.3 million gallons was consumed via 228 retail E85 sales. Lower ethanol prices relative to gasoline at the wholesale level resulted in savings to consumers of $148 million; that is, if this price differential is passed on to retail.

Investment in On-Farm Grain Storage – On farm storage capacity increased by 80 million bushels over the last nine years; this translates to $160 million in indirect capital investments.

A Lower Cost Feed Ingredient for Livestock – The effect of ethanol production in Indiana can have a net benefit of up to approximately $65.5 million across all species for livestock feeders able to utilize DDGS in their feed rations as a lower cost alternative for corn. The savings are relative to states that do not have a comparable ethanol industry.

Additional Road Maintenance Costs – Increased trucking of the outputs from the ethanol plants leads to increased wear on Indiana’s roadways. The estimated cost in 2014 for road maintenance from shipping ethanol, DDGS, and industrial corn oil by truck is $3.93 million.