Ethanol
Economic Impact Study
Ethanol is Fueling South Dakota's Economic Engine
Ethanol Production is a Billion Dollar Industry in South Dakota
South Dakota corn producers and the ethanol industry have great economic news for South Dakota. Ethanol is now a billion dollar industry in the state. That’s the results of a study* by Stuefen Research, LLC. The study shows that ethanol production helped create $1.1 billion dollars in increased economic activity in South Dakota.**
The Impact on Corn Prices
Increased demand for corn for ethanol production has produced a significant economic gain for South
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Dakota’s corn producers. Thanks to the ethanol industry’s increasing demand for corn in our state, the price basis for corn has improved an average of 20 to 30 cents over the past five years.
“We once had the widest basis in the Midwest,” Reid Jensen, a corn producer from Burbank, said. “Now we’ve turned that into a positive by taking low-cost corn and putting it into ethanol. We’re adding value to our corn before it leaves the state. If I get an extra 20 cents a bushel and produce 100 thousand bushels of corn, that’s an extra 20 thousand dollars that I wouldn’t have if the ethanol industry didn’t exist in South Dakota.”
Jensen says the investment opportunities that producers have taken advantage of in the ethanol industry provide additional economic stability. “Because I’m also an investor in the industry, it’s a hedge for me against price shifts in the energy market and the corn market.”
Positive Effects on Income, Jobs and Main Street
New Income
The ethanol study showed that every dollar of ethanol delivered creates another 9.5 cents of new income. Total new wealth created in South Dakota as a result of ethanol production in 2004 was $342 million.
Jobs
472 people were directly employed either full or part-time in the ethanol industry in 2004. Total employment impact from operation of ethanol plants was estimated to be 3,750 full or part-time jobs.
Main Street
For every $1 million of ethanol produced, $446,000 of goods and services are purchased from other South Dakota businesses.
Government
The ethanol industry pays substantial sums in sales taxes to the state of South Dakota. Ethanol sales tax payments on 2004 operations were $3.5 million.
Ethanol Production is Booming!
In 2000, 35 million gallons of ethanol was produced in South Dakota. Just four short years later, the state produced 420 million gallons. Click here to view the production map. And with existing plants expanding and new plants coming on line, our ethanol production capacity is growing again. It’s estimated that production will be at 775 million gallons a year by 2007.
With ethanol’s direct and dramatic economic impact on South Dakota, it’s easy to see why our future is growing.
About this Study
“The Economic Impact of Ethanol Plants in South Dakota” is one of the most comprehensive looks at ethanol production in the state. It was commissioned by the South Dakota Corn Utilization Council. Randall Stuefen, a consultant and professor emeritus of business at the University of South Dakota, conducted the study.
His goal was to estimate the economic impact of ethanol as an industry to the state’s economy. To arrive at that impact he looked solely at corn going into the plants and ethanol plus co-products coming out of the plants. Taxes and transportation were not considered as part of his analysis.
* “The Economic Impact of Ethanol Production Plants in South Dakota,” by Randall M. Stuefen of Stuefen Research, LLC, Vermillion, South Dakota.
** The economic impact analysis was for ethanol plants in production for the year 2004.