ROYAL – When Walker Filbert and other Pike County leaders started making plans to build an ethanol plant at Griggsville, the fuel enhancer made from corn was selling for less than $1 a gallon.
But four and a half years later, that price has nearly quadrupled, ethanol is the talk of the market, the Pike County project has expanded to a site at Royal in Champaign County and planners are ready to break ground this spring, after they wrap up a few details, at a 62-acre site just north of the JBS United elevator .
Walker Filbert, a Pike County lawyer who's a spokesman for the Griggsville project, said the partnership put together there initially made the Royal site a natural because JBS has elevators at both sites to get the corn the plants will turn into ethanol.
"We had been working to plan the Pike County facility and as part of the process, we said, JBS has a facility at Royal so let's do something there, " Filbert said. "A year ago in January, we started putting that plan together."
"Royal has productive farmers, great soil, lots of corn, a natural location," said Reg Ankrom, who's part of the planning team for the $200 million Royal project.
Les Busboom, manager of JBS' Royal elevator, said the elevator will scout far afield to find the estimated 37 million bushels of corn to produce 100 million gallons of ethanol a year beginning in about 2008.
"We'll quadruple our corn business," Busboom said. "We've purchased another area elevator and we expect to close this month. The arrangement between JBS and the ethanol plants is fantastic because we have exclusive rights here and in Griggsville to supply the plants. That's a high-end market every day."
"It's a good market, the first time farmers have had an opportunity to benefit on the value-added side. Now with $4 corn, benefits are already funneling back to farmers."
Busboom said he expects to take in most of the corn within 20 miles of the two elevators and he'll pay good prices so farmers as far as 50 miles away will truck their corn to the ethanol plant.
Busboom and Ankrom said new jobs will be available at the elevator and at the ethanol plant.
Filbert said the plant will employ 45 to 50 people with a payroll in the $2 million range.
"It's going to be a big shot in the arm for the area," Ankrom said.
Filbert said businessmen in Pike County first looked at the ethanol project "long before ethanol was sexy. The primary emphasis was, Pike County is right at the bottom economically and we wanted to do something to generate activity and play to our strong suit here, corn. We have corn, we have JBS and we have a railroad. We have gas, water and electricity. We said, let's see if it will work."
He said he's learned a lot lining up start-up money and major investors and addressing logistical issues. Filbert said if the Royal plant breaks ground this spring, it should be ready to open in January 2009.
"A key problem is obtaining stainless steel for the tanks," he said. "It's a tight commodity on the world market, and lead times for obtaining it are long. China's eating up lots of steel and so is the Gulf Coast."
The Griggsville group raised money for both plants from local investors and from a huge German bank, West LB Bank.
Royal plant planners have had success working out an agreement to sell a feed byproduct of ethanol production, distillers dried grains. Busboom said Kansas-based Bartlett Grain will market all of it. He said it can be fed to most livestock, but poultry markets, which are a big customer for the Royal elevator, are still working out formulations.
Meanwhile, the Union Pacific Railroad which runs along one side of the proposed site, goes straight to Texas and Mexico, where there are a lot of cattle feeders.
Busboom said Bartlett will have a representative on site to sell the distillers dried grains to any local farmers who might want to buy feed.
Filbert said the efficiency of ethanol plants has increased greatly just in a few years, improving production economics, although oil and commodity markets also have a big impact on profits.
"If oil got down to less than $40 a barrel, that would be somewhat problematic on the ethanol side," he said. "And corn at $4 causes a lot of stress on the input side. But I don't think corn will be $4 when we see 2007 crop reports."
Busboom said commodity prices will depend a lot on planted acreage estimated in upcoming reports and on weather this spring.
"If we see an increase in corn acreage and good weather, I expect prices to ease off," he said. "But prices have been up $1.50 a bushel since harvest, and that's all ethanol. This market has real demand behind it."
Ankrom, Busboom and Filbert were all elated to hear President Bush call for a boost in renewable fuel production to 35 million gallons by 2017.
"The country uses 140 billion gallons of gas a year, and if we did 10 percent of that, that's 14 billion gallons of ethanol," said Ankrom of the blend most widely available at stations all over the country, the market the three men think has the most future promise.
"We are absolutely excited about Bush's alternative fuels emphasis," Filbert said. "If the country wants 35 billion gallons, we have to build the plants."
"It's not going to be the savior of the country to get us beyond our crisis with foreign oil," said Jonathan Schroeder, a Champaign County Board member and a board member of Grand Prairie Co-Op Inc., which is a partner in another ethanol plant proposal in Ford County.
"It's not the silver bullet, but it's a step in the right direction," he said.