Ethanol Industry Attracting Outside Investment
From this morning’s Agribusiness Examiner comes a story about Tate & Lyle building an ethanol plant in Fort Dodge, with a note about the recent majority sale of a locally owned ethanol plant to an Australian interest:
TATE & LYLE PLANS TO BUILD ETHANOL PLANT
By David Pitt Associated Press Business Writer
May 25, 2006Tate & Lyle PLC, a London-based manufacturer of renewable food and industrial ingredients, said Thursday it plans to build a $260 million ethanol plant in the north-central Iowa town of Fort Dodge.
The plant, to be located about 70 miles north of Des Moines, would be built in two phases with an eventual capacity to produce up to 100 million gallons of ethanol a year. The plant also will make starches for the paper industry.
The first phase would have the capacity to process 150,000 bushels of corn per day. Completion of the first phase is expected by March 2009 with operation beginning in 2010. When the second phase is completed, the plant will process 300,000 bushels of corn daily.
“This investment will double our ethanol capacity, producing environmental and energy saving benefits in the U.S. and reducing American oil dependance,” said Lain Ferguson, Tate & Lyle CEO, in a statement released Thursday. The company specializes in cereal sweeteners and starches, sugar refining and value-added food and industrial ingredients.
The company said it will work with local environmental groups and the Iowa Department of Natural Resources to obtain necessary regulatory approval.
Tate & Lyle operates 65 plants in 29 countries throughout Europe, Southeast Asia and the Americas. It employs nearly 12,000 people in its subsidiaries and joint ventures.
It is the second major investment in ethanol production in Iowa by a foreign company announced this year.
On March 30, shareholders of Midwest Grain Processors approved a $100 million offer from an Australian company to buy a controlling stake in the ethanol producer.
The deal gave Global Ethanol a 60% stake in the farmer-owned Midwest Grain, which operates an ethanol plant in Lakota and owns a plant under construction near Riga, Mich.
The companies said they plan to build three more ethanol plants.
Many of the 1,287 investors in Midwest Grain are Iowa farmers who invested in the plant as a way to add value to their corn by turning it into ethanol.
“Investors in the facilities here in the state of Iowa are looking for ways they can expand their production capabilities and improve their return on investment.” said Lucy Norton, managing director of the Iowa Renewable Fuels Association, an industry trade group.
Norton said Iowa is seeing a boom in ethanol production.
“We now have 25 ethanol plants in the state of Iowa producing around 1.5 billion gallons of ethanol,” she said. “We are in the midst of a significant upswing in the production of ethanol.”
Three plants began production in the last three days, she said.
The production of ethanol will be a lynchpin of Iowa’s economic development policies: not only is there an upswing, we’re supporting political candidates that will promote Iowa’s ethanol industry. However – is such outside investment going to be a net positive? Most of Iowa’s farmland is already dedicated to the production of two crops: corn and soybeans. These two crops have taken an increasing amount of ground, nitrate fertilizer and caused a significant amount of soil erosion.
Will outside investors (those furthest from the land) view soil stewardship and sensible agricultural policy in the same light?
- Sousy