Locally-Owned Plants Better For Local Economies

Cindy Zimmerman

NCGA A study released today by the National Corn Growers Association says that ethanol plants owned by local farmers provide more economic benefits for communities than those owned by absentee investors.

The study, “Economic Impacts on the Farm Community of Cooperative Ownership of Ethanol Production,” concludes that, “Since a farmer-owned cooperative ethanol plant is literally a member of the community, the full contribution to the local economy is likely to be as much as 56 percent larger than the impact of an absentee-owned corporate plant.”

Two main reasons are given for that conclusion:

1. The share of expenditures for operations of a farmer-owned plant derived in the local community is likely to be larger than that of an absentee-owned plant. For example, virtually all accounting, administrative and marketing functions will be provided locally, while these functions may be centralized off site for an absentee-owned plant.

2. Farmer-owners of a cooperative or limited liability corporation (LLC) ethanol plant will participate in the profits through dividends. Dividends paid to farmer-owners represent additional income that is spent and invested largely in the local community, according to the study.

John Urbanchuk of LECG, LLC, conducted the analysis. The entire report can be viewed in pdf format here.