Neb. Study Shows State Ethanol Growth

LINCOLN, Neb. (DTN) -- The ethanol industry in Nebraska continues to be an economic driver for the state, a new University of Nebraska-Lincoln study found, trailing only corn and cattle production as the top two agriculture segments.

According to a report released this week from the Department of Agricultural Economics at UNL and the Nebraska Ethanol Board, the ethanol gallons produced and value of that production in 2019 both increased compared to 2017, https://agecon.unl.edu/….

The report found the Nebraska ethanol industry produced more than 2.25 billion gallons in 2019, with a production value for ethanol and co-products of more than $4.04 billion. In 2017, the state produced more than 2.07 billion gallons of ethanol valued at $3.76 billion.

The overall economic effect of the state's ethanol industry is more than $4.5 billion, according to the report.

Kate Brooks, an associate professor in the UNL department of agricultural economics and an author of the study, said in a news release the state's ethanol industry continues to weather market swings.

"While the industry experienced weakened ethanol prices in 2018 and 2019, it has shown resilience through continued expansion in total capacity and diversification of co-products," she said.

Nebraska continues to rank as the second-largest ethanol-producing state in the nation behind Iowa.

The report said the overall value of ethanol and its co-products averages about 64% of corn production, 33% of cattle production and 131% of soybean production, making ethanol the third-largest agricultural industry in the state.

In addition, the economic study found the ethanol industry continues to add jobs to the Nebraska economy.

From 2010 to 2014, the state's ethanol industry employed 1,301 full-time employees. That increased to 1,453 employees from 2015 to 2017.

"These jobs led to primary employee income of $71 million from 2010 to 2014 and $97 million from 2015 to 2017," according to a news release.

"In 2018 and 2019, the industry employed 1,460 full-time equivalents, leading to a labor income of $125 million and $13 million in indirect business taxes."

Ethanol producers' incomes tell a different story, according to the study.

From 2010 to 2014, producer income averaged $34 million and only $11 million annually from 2015 to 2017, which were "primarily caused by lower prices," the news release said. Producer income changed very little from 2018 to 2019 at an estimated average of $12 million.

Brooks said the latest data shows ethanol co-product markets continue to grow, including for dried, wet and modified distillers grains and corn oil. In addition, the study found Nebraska producers continue to expand beyond traditional co-products.

"Comparing the two most recent reports shows a trend toward stability in ethanol production," Brooks said.

Almost all of Nebraska's ethanol and about half the state's dried distillers' grain and corn oil production are exported, the report found, meaning most production results in a net-positive effect for the state. The sales outside of Nebraska represent a direct economic effect, bringing new money into Nebraska's economy, the report said.

The UNL report also found what it said was a "positive impact" on local cash corn prices. In summary, the study found an average increase in corn prices of about 21 cents per bushel in "immediate areas" near ethanol plants.

"A grower near an ethanol facility producing 220 bushels of corn per acre could receive, on average, an additional $46.86 per acre," the news release said.

"Producers farther from ethanol plants face higher transportation costs and would net a smaller amount."

Todd Neeley can be reached at todd.neeley@dtn.com

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