LINCOLN, Neb.
— A recent impact study by University of Nebraska-Lincoln (UNL) economists
reveals Nebraska’s ethanol production capacity increased by 23 percent since
2014, and continues to be a significant driver of economic impact for the
state.
“The state sees what
economists describe as an economic ‘bounce’ when we take advantage of the added
value when grain is converted to food, fuel, fiber, renewable chemicals and
bio-products,” said Sarah Caswell, administrator of the Nebraska Ethanol Board.
“There is enormous potential for biofuels to continue to strengthen the
economic health of Nebraska through bio-based innovation and international
trade.”
The
study’s authors – Dr. Kathleen Brooks, UNL agricultural economics professor;
Dr. Tim Meyer, UNL agricultural economics professor; Dr. Eric Thompson, UNL
economics professor and Bureau of Business Research director; and Dr. Cory
Walters, UNL agricultural economics professor – examined the economic impact of
Nebraska’s ethanol industry between 2015 and 2017.
As
of 2017, Nebraska’s ethanol production capacity was 2.558 billion gallons per
year, with 1,453 full-time employees at 24 facilities. This represents an
increase of 481 million gallons annually and an additional 152 full-time
employees compared to 2014.
These
additional jobs reflect the ethanol industry’s substantial and continued annual
impact on the local labor market. In 2016, the total labor income impact –
including direct and indirect jobs – was $275 million earned from an estimated
3,509 jobs for an average annual earnings of $78,300. Ethanol plant jobs
provide significantly higher-wages compared to other manufacturing positions
and are uniquely located in rural communities.
These
positive economics also occur in the local corn market due to higher demand
from nearby ethanol plants. The study noted a consistently positive impact on
local basis (the difference between the local cash price and the futures price)
from ethanol production. For example, a producer near an ethanol plant
producing 220 bushels of corn per acre would receive an additional $11.44 per
acre each year.
Nebraska’s large ethanol production
results in 94 percent of the product being shipped out of state, making
Nebraska one of the largest exporters of bioenergy. In addition, 51 percent of
dried distillers grain produced in 2015 and 44 percent in 2016 were shipped out
of state. These out-of-state sales result in a net positive for the state and
represent a direct economic impact by bringing new money into the state
economy.
“The quantifiable economic impact of
ethanol production on the Nebraska economy is clear,” said Jan tenBensel,
chairman of the Nebraska Ethanol Board. “But we should also understand the enormous
savings in health and environmental costs associated with displacing toxic
petroleum products with cleaner-burning biofuels like ethanol. Choosing ethanol
fuel brings additional and significant cost savings in terms of public health.”
Although ethanol and co-product production
increased in 2016 and 2017, prices declined and led to reduced overall
production values. Between 2015 and 2017, Nebraska’s value of production for
ethanol and co-products averaged $3.8 billion.
While
the value of production for ethanol and co-products was lower between 2015-2017
compared to previous years, both ethanol capacity and employment increased
indicating a positive long-term outlook. Ethanol plants continue to assimilate
technology that increases efficiency and diversifies their production portfolio
to take advantage of new market opportunities.
The
purpose of the “Economic Impacts of the Nebraska Ethanol and Ethanol
Co-Products Industry” study was to estimate the value of production during
2015-2017 as an update to the 2014 study, and compare that value to major
commodity production values in Nebraska. In addition, the study measured
productive capacity, co-product value, employment, net returns, in-state
utilization and exports. To view the full study, visit https://agecon.unl.edu/ethanolimpacts.
