Ethanol Economic Effect
Nebraska is the second-largest ethanol producing state following Illinois. Nebraska has 26 ethanol plants permitted by the Nebraska Department of Environment and Energy with a combined production capacity of over 2.6 billion gallons. Currently, 24 of the 26 plants are operating. Thus, it stands to reason ethanol production in the state packs an economic wallop. A report released this summer provides estimates of the economic impact of ethanol production to the state and indeed, shows the wallop is potent. The report was written by economists with the University of Nebraska-Lincoln Bureau of Business Research and Department of Agricultural Economics and sponsored by the Nebraska Ethanol Board.
The report states ethanol production is the third-largest agricultural industry in the state following cattle and corn production. The co-products from ethanol production include distillers grains (wet, dried, and modified) and corn oil. In 2019, the industry produced 2.25 billion gallons of ethanol with a value of $2.97 billion. Employment in the sector equaled 1,460 full-time jobs. When accounting for multiplier effects, the total economic impact of ethanol production was $3.8 billion in total output (business receipts) and 4,632 jobs. Each $1 million in ethanol or co-product sales contributed 1.44 jobs to Nebraska’s economy. Growth in ethanol production also changed the state’s cropping mix. The authors’ estimate the growth in ethanol production since 2006 has led to an increase in the state’s corn acres of 1.93 million, most of which has come at the expense of soybeans, hay, and alfalfa acres. When the effects of the changed crop mix is included in the economic impacts, the economic impact of ethanol production is 6,226 jobs and $4.5 billion in total output.
Little of Nebraska’s ethanol production is used in the state. A survey of ethanol producers in 2015 and 2016 showed 94 percent of ethanol produced was exported beyond the state’s borders. California and Texas are the largest markets, but some production is shipped overseas as well. The survey also showed roughly one-half of dried distillers grains is exported, but most wet distillers grains remains in state, consumed by the livestock industry.
Whether exported or consumed in state, the production of ethanol and co-products pack an economic punch. The ethanol sector is one example of many of the interdependence of the agricultural production and processing sectors in the state.
Figure 3. Nebraska Ethanol Production
Figure 4. Value of Nebraska Ethanol and Co-products Production
