Corporate ethanol plants like the new Husky Energy facility contribute less to rural communities than farmer-owned plants, says a new report.
“Since a farmer-owned co-operative ethanol plant is literally a member of the community, the full contribution to the local economy is likely to be as much as 56 percent larger than the impact of an absentee-owned corporate plant,” concluded a study released by the U.S. National Corn Growers Association.
That is because farmer-owned plants are more inclined to hire local people to fill accounting, administrative and marketing roles, rather than shipping those jobs to a centralized off-site location. Also, farmer-owners earn dividends that are likely to be spent and invested in the local community.
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“By putting money directly into the pockets of local residents, farmer-owned ethanol plants have spurred economic growth in rural communities across the country,” said Bruce Noel, chair of the NCGA ethanol committee.
The corn group is trying to reverse the trend toward corporate ownership in the U.S. ethanol sector. Nearly half of the existing 97 plants are producer facilities but only two of the 43 plants under construction are majority owned by farmers.
Lionel LaBelle, president of the Saskatchewan Ethanol Development Council, said Wall Street investors have elbowed their way into the U.S. ethanol industry. Their money is behind most of the new projects.
“They’ve just gone out and started to do it, devoid of any producer involvement at all.”
Canada seems to be adopting a similar model of ethanol development. Of the 10 projects either in operation or close to launch, only one is farmer-owned and that is Pound-Maker Agventures in Lanigan, Sask., said LaBelle.
While the federal government seems to be supportive of locally owned ventures, LaBelle remains anxious that the corporate world will obtain a stranglehold on projects in Saskatchewan, where groups like Husky Energy and Terra Grain Fuels Inc. are busy constructing large scale plants.
“That’s not necessarily the best thing for the economy,” he said.
Dennis Floate, spokesperson for Husky Energy, which planned to open its 130-million-litre plant in Lloydminster, Sask., this week, said corporate plants have plenty to offer rural areas.
“We expect once our plant gets up and running we’ll probably be spending $75 million a year in the community. That will be going for purchase of grain and related operational expenses.”
Once the Husky plant is in full swing, it will purchase 350,000 tonnes of wheat a year from local producers and provide full-time jobs for 25 area residents. And there will be spin-off activity.
“We do have a policy, all things being equal, we will buy from within the community for maintenance services, contract services and subcontracting various services as well,” said Floate.
LaBelle expects an announcement from the federal government in the third week of November that will add meat to its commitment to have all gasoline and diesel contain an average of five percent renewable fuels by 2010. If the policy supports farmer ownership, it will create an immediate domino effect of building small plants in rural areas.
“We will get a number of people that will be Johnny-on-the-spot. They will announce and start digging holes,” said LaBelle. “(In) 10 years from now and we have X amount of facilities in this province and half of them are owned by farmers, I think we’ve hit a home run.”
