Fuel farming: Missouri farmers harvest bumper crop of ethanol, raising spirits and cash

Rural Cooperatives, Sept-Oct, 2006 by Dan Campbell

As he guides his combine across fields of ripe corn near Marshall, Mo., Brian Miles doesn't look anything like a Texas oil tycoon. Nor do Randy Britt of nearby Kaseyville or Dale Samp of Cairo, Mo., as they tend their crops and livestock.

But a new breed of home-grown 'oil baron' is sprouting on farms like this all across America. J.R. Ewing (of "Dallas" fame) has nothing on these farmers and others like them, some of whom are making more profit these days from their investments in ethanol than from other farm income. Indeed, J.R.'s oil fields probably went dry years ago, but these "fields of renewable energy" should never run dry, barring severe drought.

Much of their crop will be trucked just a few miles away to be processed into ethanol. Better still, the corn will be processed at bio-refineries that Miles, Britt, Samp and hundreds of their fellow Missouri producers own and operate.

Inside the cab of his combine, Miles glances at the corn stalks bowing down and disappearing beneath him, then at a yield monitor that displays his per-acre haul and the average moisture content of the corn. As he drives, the GSP-enabled monitor creates an electronic map of his fields that will later be used to fine-tune everything from his fertilizer and seed applications to where he will lay new drainage tiles.

"This technology helps us practice precision agriculture, so we only apply what the crop needs," he says over the rumble of the machine. "We treat the land with respect, because I want my kids and their kids to be able to farm this land as well," says the young father of three. The increased returns the farm nets from its ethanol investment may also help ensure that farming remains economically viable enough to keep his children in farming, should they so choose.

In addition to the economic benefits of biofuel, producers also cite patriotic and homeland security incentives as adding to a sense of urgency for renewable fuels development.

"We are showing the nation that we do not have to be so dependent on foreign oil, and that we should not allow ourselves to be held hostage to Middle East oil," says John Eggleston, president of Northeast Missouri Grain Processors Inc., a cooperative which is majority owner of Northeast Missouri Grain LLC (NEMO) in Macon, Mo., the state's first ethanol plant. "We still have a long way to go, but farmers are helping to change the energy picture. We feed the world, and we can help fuel it too."

Co-ops unite producers

Miles is one of 700-plus farmers of Mid-Missouri Farmers Energy (MidMo), a new-generation cooperative that operates a 50-million-gallon-per-year ethanol plant near the small village of Malta Bend, about 12 miles northwest of Marshall. This new-generation co-op plans to begin an expansion project next year which will double the plant capacity to 100 million gallons of annual production. Samp and Britt are among the 311 members of NEMO, which produces about 45 million gallons of ethanol annually in Macon.

Producers who invested in the ethanol plants have reaped dividends "beyond our wildest expectations," says Ryland Utlaut, president of MidMo and former president of the National Corn Growers Association. "We couldn't have picked a better time for our plant to come on line," he says, noting that the start-up 19 months ago coincided with a tremendous run-up in ethanol prices.

Ethanol profits climbed steadily as oil prices soared from $40 to more than $75 a barrel last summer. The phase-out of MTB as an oxygenator for gasoline and the hurricanes that battered Gulf Coast oil refineries also combined to push the price up.

Some producers report that their stock values in co-op ethanol plants have increased 5 to 10 times since the initial purchase (although virtually no one is selling stock, so such claims are hard to verify). MidMo paid members a 31-percent dividend on its first partial year of operation, and will pay an even higher dividend this year. NEMO has also paid sizable dividends for several years running.

In addition to returns from their ethanol plants, producers have also benefited from corn prices that have been boosted from 10 to 20 cents per bushel in the plants' procurement areas. "That doesn't just help co-op members, it helps all farmers," says Eggleston.

Good uses for ethanol dividends

On the Miles' farm, those ethanol dividends helped to buy an additional 140 acres that the family had been renting for more than 30 years. For Samp, ethanol dividends provided additional funds for the custom home he built on his farm. Britt says he's used his ethanol returns in a number of ways to improve his grain and cattle operation.

Miles credits NEMO and the Golden Triangle Energy Cooperative in Craig, Mo., for "paving the way for our success." The success of MidMo is similarly inspiring more biofuel projects. Three or four of his fellow MidMo directors are on boards of co-ops or LLCs that are building biodiesel plants around the state, including one slated to open this fall in Mexico, Mo.

Miles, who grew up in Marshall and graduated from the University of Missouri in Columbia, says the town's economy had been fairly stagnant for many years. But the ethanol plant has been a jolt in the right direction. "The addition of 35 or 40 good jobs at the plant--and that doesn't count other spin-off jobs it created--is a huge plus for a rural town like ours."