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To process Bootheel corn...: Investors sought for ethanol plant

Most of the money from a bushel of corn is made after it leaves the farm. A new ethanol plant could help southeast Missouri corn producers capture some of that windfall.

SEMO Ethanol, Inc., says to construct the plant, which graded out very high in a feasibility study, it needs $3 million from corn growers. It's offering two investment options; $750 in seed money, a total investment of $30,000 and a corn commitment of 36,000 bushels per year; or, $375 in seed money, a total investment of $15,000 and a corn commitment of 18,000 bushels per year. As an added incentive, participating growers will receive a tax credit of up to $15,000.

Randy Jennings, president of SEMO Ethanol, the company formed to explore ethanol options in the region, says some or all of the seed money could be forfeited if the plant doesn't come to fruition, but if the startup is successful, the seed money would be applied toward the total investment.

All those who invest would be members of a so-called "new generation cooperative." They would receive a premium when they sell corn to the plant and be eligible for dividends. Jennings noted the cooperative will be "closed" with participation based on a first-come, first-serve basis until the $3 million investment level is reached.

A large group of farmers gathered in Rick Branch's farm shop recently to hear the latest news about the ethanol plant. "I can't raise $1.50 corn," said Branch, a Gideon, Mo., corn and cotton producer. "The ethanol plant up in northern Missouri is paying members of its co-op a 50-cent premium for corn. A 50-cent premium would be enough to keep my head above water."

Jennings told growers that at first he was skeptical about an ethanol plant in the Bootheel. "Our basis is normally so strong in corn, that I didn't think there was any way ethanol could compete."

But now that the basis has disappeared, and ethanol prospects are looking brighter, it might not be such a bad idea after all.

Jennings pointed to the federal "renewable fuel standard" which requires that all fuel sold in the United States have a certain percentage of renewable fuel blended with it.

"They started out with a 2 percent figure, which would use up 96 percent of the ethanol production in this country. That means there was not much room to expand. But the National Corn Growers Association and others have been knocking on doors asking that they increase that to 3 percent now and eventually get to a 5 percent renewable fuel standard."

With that, and if ethanol could further penetrate the market created by the federal government's 10 percent oxygenate requirement in fuels, opportunities for corn producers will be significantly increased. Currently, 85 percent of the oxygenate in fuels is being supplied by MTBE, an oil-refining by-product which many states are considering banning.

"That would demand a whole lot more ethanol and soy diesel," Jennings said.

Through the SEMO Ethanol Committee, Jennings and Van Ayers, University of Missouri Cooperative Extension Service, applied for and received a grant to do the feasibility study on the plant.

They hired Bill Adcock, who has a consulting firm which helps other farm groups plan and construct ethanol plants, to do the study. Adcock managed an ethanol plant in Minnesota for 18 years.

The feasibility study "turned out pretty good," Jennings said. "Bill said that on a scale of 1 to 10, the highest he gave any of the previous groups was a 6.5. He gave us an 8.5. Our corn production is here. Sometimes our basis is a little strong, but he still thinks that an ethanol plant can compete."

"I've been in every ethanol plant in the United States except two," Adcock said. "Since 1992, most of the U.S. ethanol plants have been put in by cooperatives. Not one of them is not successful. The ones in Minnesota are paying top dollar for corn from the members.

"Today, the money is made in corn after it leaves your farm," Adcock said. "If you don't have a way to participate in that, somebody else is going to pick up the added value."

Jennings is now putting together a business plan for a grower-run cooperative, which would build, supply and run the plant. He received another grant recently to write the plan. Once that's put together, the company will step up its search for grower-investors.

The $3 million will be used to help finance the building of the plant, which Jennings estimates will cost around $13 million. The tentative site for the plant is an old airport site north of Malden.

Jennings believes that once the plans are squared away and growers are signed up, it will take one and a half to two years to get the ethanol plant running, probably in 2002.

Drought-breaking rains in parts of Missouri that could lead to bumper crops have also created potential problems. One dilemma facing Missouri farmers is finding places to store surplus grain, said a University of Missouri Extension agricultural engineer.

"Timely rains have turned what could have been respectable prices for a short crop into an abundant harvest that will be difficult to move and even more difficult to store," said Bill Casady of the Extension Commercial Agriculture Program. "Storage concerns are once again the talk of the town in many farming communities."

Casady urged producers to explore all available long-term storage sites. The Missouri Grain Storage website at might offer some answers. "But don't stop with the database, check with neighbors and utilize cylindrical metal bins first," he said.

"If a temporary storage structure appears to be the only available alternative, keep in mind that temporary storage is just that - temporary," Casady said. "A temporary storage structure should be the last filled and the first emptied."

Temporary storage facilities are usually inadequate structures in which to dry grain, so only high-quality, cool, dry grain should be stored in them,he said.

Temporary storage structures are often not built to withstand the pressure on the walls exerted by stored grain. "While corn piled to a depth of 1 foot exerts only 11.5 pounds of pressure per foot of wall, corn piled to a depth of 8 feet can create a total force of 736 pounds per linear foot of wall,"

Casady said. "That's 64 times as much pressure." Most temporary structures are suited for piles of grain no higher than 4 feet along the walls.

Temporary facilities require careful cleaning, he said. "Sheds used for temporary storage that still contain traces of livestock waste, ag chemicals or petroleum products can contaminate grain, resulting in an unacceptable or downgraded product."

Another crucial factor is moisture, he added. "Obviously, when providing temporary storage on bare soil, plastic must be used to prevent moisture from re-wetting grain on the bottom of the pile." But concrete floors may also allow moisture to wick up from the soil and re-wet stored grain. "Cover the floor with plastic to prevent spoiled grain unless you are confident that the floor already includes a vapor barrier," he said.

Aeration keeps grain in good condition, and properly placed aeration ducts are essential to eliminate "dead zones" where spoilage in is most likely to occur in temporary storage facilities. This is especially important when the grain is to be stored for a month or more.

"The best approach is to adopt a set of approved and tested plans," Casady said. The Midwest Plan Service publication, "Grain Drying, Handling and Storage Handbook" (MWPS-13) is available through the MU Extension Publications office, 2800 McGuire Blvd., Columbia, MO 65201. To order by phone with a credit card, call (573) 882-7216 or toll-free at (800) 292-0969, or on the web at

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