Originally created 07/31/05

Ethanol production is bonanza for cornbelt



FILLMORE, Ind. - Kim Ames has experienced good times and bad on the 4,000 acres his family has farmed for three generations.

He hopes a $125 million ethanol plant being built near his central Indiana farm tips the scales in favor of the good, giving him a local buyer for half the 300,000 bushels of corn he produces each year.

"I think it's good," he said. "We've always been exporting our corn somewhere. Now we'll be doing something (local) with it."

The Putnam Ethanol plant being built in Cloverdale, about 40 miles west of Indianapolis, is one of dozens of ethanol plants being developed across the country as part of a national push toward alternative fuels.

The industry is about to get a major push from new federal energy legislation that would require refiners to double the use of corn-based ethanol in gasoline to 7.5 billion gallons a year by 2012. After the U.S. House of Representatives approved the energy bill Thursday, the White House said President Bush looks forward to signing it into law.

The bill would lead to about $6 billion in new investment in ethanol plants across the country and generate about 200,000 jobs, said Monte Shaw, a spokesman for the Renewable Fuels Association.

"It's going to be good for consumers, good for taxpayers," he said. "It's going to be really good for rural communities."

Proponents say the U.S. needs to produce more ethanol, a corn-based fuel additive made from distilled grain mash, to reduce its reliance on foreign oil. Oil prices have hovered around $58 a barrel recently, driving up costs for gasoline, airline tickets and other consumer goods.

Ethanol was used in cars in the early 1900s, but mass production of the fuel didn't begin until the 1970s. In 2004, 81 plants produced about 3.4 billion gallons of ethanol nationwide, according to the Renewable Fuels Association.

Almost 86 percent came from the Midwest, which produces more than two-thirds of the nation's corn.

Ohio has six ethanol plants in the works.

Indiana, the nation's fifth-largest corn producer, already has one ethanol plant. New Energy Corp. in South Bend produces more than 100 million gallons a year. The Putnam County plant, expected to open in August 2006, could produce 72 million gallons a year.

Critics say ethanol increases the cost of corn, which in turn means livestock owners pay an average of $3,500 more a year for feed. They also contend that while E85, the gasoline-ethanol mix sold at 400 stations nationwide, costs an average of 30 cents a gallon less than regular gasoline, it is also less fuel efficient.

Recent research by a Cornell University professor says ethanol uses about 30 percent more energy to produce than it puts out.

"It's an absolute waste," said Dr. David Pimentel, a professor of agricultural sciences. "The only reason we're doing this is because of politics and big money."

Mr. Ames, the Indiana farmer, is willing to take his chances.

He said the new ethanol plant means his corn will sell for about 10 cents more a bushel - bringing in an extra $30,000 a year.

"Does $30,000 make or break us? No," he said. "But does it help? Yeah."