Co-op purchase of SD ethanol plant bucks trend
The poor economics of ethanol production in the past year have forced many farmer-owned ethanol plants to sell out or go out of business. However, a farmers’ co-op in South Dakota is bucking that trend with its purchase of a former VeraSun ethanol plant.
The Central Farmers Cooperative of Marion, South Dakota has acquired the 110-million gallon plant located in Marion. Neither of the price nor terms of the plant’s sale were announced. The plant will become NuGen Energy, LLC, a subsidiary of the Central Farmers Cooperative.
The co-op’s general manager, Steve Domm, says it’s good to have the plant back in local control.
“We feel very strongly that we wanted to get this plant back into the local control of the producers,” Domm says, “and back to what it’s supposed to do and that’s create demand for our producers’ products.”
The co-op’s purchase of the plant brings it back full circle. The plant was built by a group of local investors in 2005, under the auspices of the Central Farmers Co-op. U.S. BioEnergy purchased the plant in 2007, and later that year, VeraSun purchased the U.S. BioEnergy plants. The plant is back in operation after being idled in the fall of 2008 after the VeraSun bankruptcy.
Domm says good risk management will be essential going forward. “It’s all about running an efficient plant. It’s all about doing the right thing. It’s all about looking for additional streams of revenue-and good, solid risk management.”
And Domm says they are optimistic about the future for ethanol.
“With the second largest corn crop on record coming in this year,” says Domm, “and with crude-I don’t know if we’ll ever see it stabilize again, but it seems to be at a level where people are comfortable–yes, I do believe that ethanol has a very bright future.”
Brian Jennings, executive director of the American Coalition for Ethanol, says conditions have improved marginally in the ethanol industry. He tells the Sioux Falls Argus Leader that most plants are probably making a bit of a profit today. In his words, “things are looking up”.