Agriculture has long been a victim of its own success. When doubts have arisen in the past about whether farmers could produce enough, they have every time been swept away in a sea of over production.
Because of its astounding bounty, agriculture has been able to move beyond providing food to meet other needs of society, including energy.
“Farmers are seeing we have far too much commodity on earth. This is the same thing that happened in the 1980s when biofuels were born. The way we solved that problem was to build ethanol plants and use up that extra supply. Today commodities are again oversupplied and we need the support of rural America because there are competing interests in the energy market that do not want to see us grow. We are constantly battling and we need to work together for higher ethanol blends in our gas tanks that are great for the environment and also great for Ohio’s farmers,” said Jeff Broin, CEO of POET, at the recent groundbreaking ceremony for the company’s Marion ethanol plant expansion. “In recent years, I know farmers are struggling with low commodity prices, which is creating lower farm incomes and decreasing land values. Biofuels have been the only real growth sector for ag commodities in the past decade.”
POET has 27 ethanol plants and selected the central Ohio site to double production.
“Ohio is a great place to do business. We love your business climate and your corn supply is great. Working with your state and local governments has always gone exceptionally well. Infrastructure, rail lines, natural gas availability, and electricity availability are all things that go into deciding where a plant will be,” Broin said. “In all of our 27 plants this one was No. 1 to expand next.”
Ohio is an important location for serving domestic ethanol markets on the East Coast and also for serving potential export markets in the future.
“We are working really hard on export markets. We are now exporting ethanol and DDGs,” Broin said. “Corn export markets have not changed in 35 years, but we are now exporting a billion gallons of ethanol going out of the country in the form of energy and adding jobs right here. We are creating new manufacturing jobs to export energy around the world.”
POET Biorefining – Marion will expand its production capacity from the current 70 million gallons per year to 150 million gallons per year. The project will also increase production of dried distillers grains from the current 178,000 tons annually to 360,000 tons.
“This expansion will add 26 million bushels of new corn demand annually for the local area and create new jobs and economic activity for rural Ohio,” Broin said. “We are excited that the Marion plant expansion can play a small role in this important arena.”
This expansion is the largest project in the Marion area since the construction of the original POET Biorefining – Marion in 2008. With the groundbreaking in August, site work has officially begun, with project completion slated for the third quarter of 2018.
The $120 million project will provide 225 temporary construction jobs and 18 to 21 new permanent jobs at the site, said Rick Fox, general manager of the Marion POET facility.
“We chose here because the community and the farmers in the area are very supportive of what we want to do. We’re going to essentially double our volume here at this facility and double our purchases of corn and double the ethanol we produce. We’ll hire about 20 people and that is a significant impact for the surrounding community,” Fox said. “When these plants were built the expansion was anticipated. A lot of the infrastructure is already existing and we are basically putting an identical plant right next to our existing plant.”
In addition to the direct economic impact of the new plant, the increase in corn demand will have a broad benefit for corn producers.
“This is a 26 million bushel corn market opening up. We get excited about 5 or 6 million bushel corn markets that are new for Ohio. This will take Ohio over a half billion gallons of ethanol produced a year,” said Tadd Nicholson with Ohio Corn and Wheat. “We’ve been working on ethanol for 25 years. It was one of the first things the first boards worked on with the new corn checkoff. They knew we could make ethanol more efficient and they started to invest in research.”
With this continued big investment, Nicholson said there are several key policy concerns moving forward to further build upon Ohio’s existing ethanol infrastructure.
“There is one really obscure thing — the Reid vapor pressure. It is one of the reasons we can’t sell E15 here in Ohio all year long. It is an obscure regulation that allows for a waiver for E10, but nothing above E10. There is a summer period where we have to shut down the sale of E15 but you can sell it during the winter months,” Nicholson said. “This waiver was put into place before we even had E15 as a certified fuel. It is unnecessary and unscientific and does nothing for the environment, but it does block the sale of E15. We’ve been working hard to get a waiver for this, but it is difficult to get anything small that makes good sense done in Washington, D.C. We know that 15% ethanol and higher blends only get better for the environment and it makes no sense why we have a block on E15.”
The other key for ethanol is continued support from the initial levels specified in the Renewable Fuels Standard (RFS).
“In the RFS there are various tiers for the mandates each year. The first generation ethanol mandate is 15 billion gallons and we’ve reached that. The EPA stood behind that. There are some areas we could do better at, especially in the biodiesel area, but overall we are pleased with ethanol being at the statutory levels,” Nicholson said. “It is important to understand why the ethanol industry in Ohio would be expanding at all. In this country we have hit our maximum and we don’t need a whole lot more production for domestic use. It is about exporting ethanol — that is the big new frontier. Mexico is a great example. It is the first big market. Today they don’t use any but they are now able to go up to 10% in their fuel. It is a market that if fully realized, it would require almost Ohio’s annual production of corn. Even if it’s only half realized, it is a big market.”
With the potential in Mexico and other countries looking to expand renewable energy, trade agreements are very important, particularly the North American Free Trade Agreement currently being re-negotiated, said John Linder, a Morrow County farmer and National Corn Growers Association board member.
“You don’t necessarily have to deliver right here to POET to get to appreciate the value of this expansion. Basis everywhere in the area is going to have to increase,” Linder said. “The future of ethanol exports is bright. We didn’t realize that Canada would be our No. 1 export for ethanol. That is absolutely wonderful for our markets. We have to realize that 31% of ag income comes from exports. Any place we can build relationships to keep what we have and build new markets for corn is important to us.”
In the end, the POET expansion will benefit the Marion community, the local corn price, and the state of Ohio, said David Daniels, director of the Ohio Department of Agriculture.
“POET’s expansion will create even more market opportunities for Ohio’s producers and help the state’s number one industry, food and agriculture, continue to grow. Agribusinesses recognize Ohio’s growth environment and ultimately all Ohioans — consumers and farmers— benefit from this growth,” Daniels said. “We are so happy that POET has made the investment and chosen to expand in Marion, Ohio. We want to congratulate the POET team. We know you had plenty of places where you could invest your capital and we appreciate you choosing Ohio.”