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Ethanol Plant Financial Management

This report discusses the significant economic impact of ethanol plants, particularly a 50 million-gallon-per-year facility, highlighting its local expenditures of $46 million and creation of 836 jobs. It emphasizes the importance of state incentives, including cash incentives and tax credits, in supporting the ethanol industry, which reduces dependence on foreign oil and boosts rural economies. The report also addresses risk management for commodity-based operations, infrastructure development, and the role of policy leadership in encouraging sustainable agriculture and economic diversification.

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Ethanol Plant Financial Management

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  1. Ethanol Plant Financial Management Governors’ Ethanol Coalition October 2006 Kansas City, Kansas

  2. Economic Impact • National • Reduces dependence on foreign oil (President’s AEI calls for 75% replacement by 2025) • Rural Communities • Jobs • Infrastructure • Crop prices • A 50 mgpy plant = $46 million annual expenditure locally • Uses 18.2 million bushels of corn • Creates 836 jobs across the economy

  3. Risk Management • Commodity Based • Double/Triple-sided commodity • Grain input • Natural gas usage • Ethanol output • Capital Intensive • 50M gallon plant requires $75M to $100M in capital and debt

  4. State Incentives • Why give incentives • Cash incentives • Tax credits • Mandates? • What are the benefits • Encourage value-added/diversify ag sector • The value of the tax incentives are shared among different groups including blenders, ethanol producers and farmers

  5. GEC Support • Who Needs It? • Producing Plants • Plants Under Construction • Proposed Plants • Important role of policy leadership • State emphasis/highlights

  6. Questions? Donna Funk Kennedy and Coe, LLC 250 N. Rock Road, Suite 270 Wichita, Kansas 67206 Phone: 316-685-0222 funk@kcoe.com

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