New Study Finds Community Betterment with Ethanol

June 21, 2002

A new study highlights how expanding the production and use of ethanol will benefit local communities by creating jobs, spurring economic development and improving farm income. The study, Ethanol and the Local Community, examined the local impact of a hypothetical 40 million gallon per year ethanol plant based on national averages. This size of plant is the most common under construction today and is expected to remain common as the ethanol industry grows over the next decade.

The study found that building and operating an ethanol plant of this size will:

1. Provide a one-time boost of $142 million to the local economy during construction.

2. Expand the local economic base of the community by $110.2 million each year through the direct spending of $56 million.

3. Create 41 full-time jobs at the plant and a total of 694 jobs throughout the entire economy.

4. Increase the local price of corn by an average of 5-10 cents a bushel, adding significantly to farm income in the general area surrounding the plant.

5. Increase household income for the community by $19.6 million annually.

6. Boost state and local sales tax receipts by an average of $1.2 million (varies depending on local rates).

7. Provide an average 13.3 percent annual return on investment over ten years to a farmer who invests $20,000 in an ethanol production facility.

"The economic activity generated by an ethanol plant ripples throughout the region as new wage-earners spend their money at local businesses," concluded Bob Dinneen, president, Renewable Fuels Association. "This study demonstrates how dramatic the economic impact can be. It's no wonder many communities view value-added opportunities like ethanol production as the best way to revive stagnant rural economies."

It was conducted by John Urbanchuk of AUS Consultants and Jeff Kapell of SJH & Company. AUS is an economic and market research consulting firm that provides clients in the ethanol and agriculture industries with policy studies, outlooks, and economic impact and feasibility studies designed to support corporate decision making. SJH is a management-consulting firm specializing in food, fiber, ethanol, and worldwide agribusiness, assisting clients at every stage of procurement and production, finance and marketing, planning and acquisition.