"I work with an ethanol plant. I'm on the board for an ethanol plant south of here that's getting ready for a start-up [in 2007]… It's been a long process. It started about three years ago with an idea. There's seven local members and two outside members – people outside the state actually – that are involved. They are kind of spearheading it. And the local involvement has been very good, strong. I think it's going to be a good industry for the community. It's one of those things that keeps the dollars here. And they allowed for – What this ethanol plant did is they allowed for the local public to be involved with purchasing shares of that. And we hope that in the long term that's where the real value is and the fact that it does make money and it is profitable and we can share those results with the local community…
     "If you're not a livestock producer and can't use your crop, use your corn [as livestock feed], it's really hard to add value to a corn crop. And so, we had to rely a lot on exports. And exports were really the last two cents on every bushel we got, as to what that export number was going to be. And right now we can add a little value to that crop at the farm level and ship it off in ethanol. And the beauty of it, if I'm a farmer and corn is high, the ethanol plant's probably not doing as well. But the farm is doing pretty well, so it's a nice little hedge that way. The flip side of that is, if ethanol's really high and corn's really low, the ethanol plant's going to be making money, hopefully."
     [Question:] "Overall ethanol has driven the price of corn up, correct?"
     [Question:] "In a general way."
     "Locally, yes."
     [Question:] "Locally?"
     "Yes, and nationwide. Locally, it's really helped quite a lot. There's quite a few ethanol plants in Nebraska right now, so the demand for corn is very high as compared to maybe South Dakota or North Dakota. They don't have as many ethanol plants and the difference between their price and the [price at the Chicago] Board of Trade is a lot less than our price here."
     [Question:] "Do the state incentives that were implemented a few years ago, does that make any difference? I mean, are you guys taking advantage of that?"
     "The state incentives really helped get the ball rolling, but it still has to stand on its own. The plant's really got to make money on its own, long term. As in any business, they're great. Any time the government can come in and really help subsidize to get things rolling, I think that's a great spearhead. But, I think industry is probably getting close to the point now it will either stand on its own or fail. And I think it will stand on its own."
     [Question:] "What's the work involve in setting up an ethanol plant?"
     "[Laughs.] I don't even know where to start there. It started as a thought from a gentleman out of Minneapolis. He was involved with structuring the debt on another plant in South Dakota. And he was not allowed to invest in that plant, and saw that it could be a good business. So he teamed up with a friend of his and started searching the country for a good site. And they put some feelers out and they found Fairmont, Nebraska. And so they found a good site, first off. And then secondly they found some local producers, local involvement, local businessmen to represent the community and plant and join the board.
     "Since then it's been kind of a roller coaster. When we started it was just basically the nine members doing everything from the EPA approvals to signing the contracts with the construction people and buying the land and the option. So it was pretty involved. It's still pretty involved, but we've since hired some staff and some employees that handle a lot of the day-to-day. So – "
     [Question:] "How did you get involved?"
     "I was at the right spot at the right time, or the wrong spot at the wrong time, one of the two. No, I was just a local producer that had interest in it and just fell into part of the group."
     [Question:] "Interesting. And you're putting up some of your money to back it."
     "Yeah. I think it's a nice hedge on the other side of the corn equation. If corn is high, the farm wins. If corn is low, the ethanol plant wins. So one way or the other, it kind of puts us in kind of a synthetic floor under the corn price…"
     "It's actually a pretty simple process. They bring corn in and they grind it and mix it with some enzymes and some water and ferment it. And after about 50 hours they distill it. And its converted to either alcohol or – on the other side – we get distiller's grains [livestock feed] and out the stack is some carbon dioxide. The ethanol will probably get either trucked out or railed out. A lot of it will get railed out to a [gasoline] blender. I'm sure a lot of it will get used locally in the truck market. And with the distiller's grains, a lot of those will be hopefully shipped straight to local feed yards. Actually Kansas has a lot of feed yards that will probably be beneficial for us to attract, too. A lot of our distiller's go there. We also have the ability to dry the distiller's [grains], so we have the ability to dry and to ship. We can ship it to California; they have some big users there. And actually they put them on barges in containers and shipping distiller's grains across the ocean."

Troy Otte – Investing in Ethanol


Excerpts from Troy Otte’s Interview:

Logic of Large Farms
Starting Up in the 80s
Why be a Farmer?
Who Runs Rural Communities?
Fertilizer Efficiency
Genetic Engineering
Are Pivots Worth the Cost?
Computers on the Farm