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.