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Day four: Outside interests put money on table
Ethanol was built on cash from farmers and their neighbors. But the boom is pushing them aside in favor of deeper pockets from elsewhere.
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Bobby Johnson is still not used to the snide comments and envious
glances.
Johnson, who owns the grain elevator in this western Minnesota
city, dates the resentment to a Nov. 14, 2005, meeting at the Old
No. 1 Bar & Grill. There, amid impassioned speeches and
accusations of selling out, Johnson and other shareholders voted to
sell the city's ethanol plant to an Australian company.
The sale generated windfalls, some in excess of $2 million, for
some investors. Johnson, 54, made half-a-million dollars - enough
to pay off four decades of debt. But it also turned some farmers
against one another, creating division in a community once united
behind the ideal of a locally owned ethanol plant.
"You couldn't pry their farms away from them, but they sold this
one ethanol plant real quick," said Gerald Rust, a Glenwood
farmer and former chairman of the plant's board who voted against
the sale.
Midwest farmers may have built the U.S. ethanol industry, but two
decades later they are increasingly worried about being elbowed
aside as Washington politicians, Detroit automakers and Wall Street
investment bankers finally embrace it.
Just one in eight ethanol plants under construction this summer
were farmer-owned, compared with eight in 10 just two years ago,
according to the Renewable Fuels Association, a trade group. And
with foreign and U.S. investors combing the countryside for sites
to build or plants to buy, a number of farmers are opting to sell
rather than risk competing against the much larger privately owned
plants.
This spring, Global Ethanol, an Australian investment group
created by a large South African bank and other investors, bought a
60 percent stake in an ethanol plant in Lakota, Iowa, for $100
million. About a third of the plant's nearly 1,300 farmer members
voted against the deal.
About 125 miles west, in Sioux Center, Iowa, a farmer-owned
ethanol cooperative is weighing a merger offer from a public
company that it won't identify. The plant's general manager, Bernie
Punt, said he expects the board of directors to vote on the
proposal within the next month.
A cooperative effort
To some farmers and politicians, the notion of sending profits
from an ethanol plant to far-flung investors undermines the
rationale behind the industry - that farmers reap the profits from
value-added processing. It's a sensitive issue in Minnesota, where
most of the ethanol plants are still owned by farmer groups.
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Lights out at U energy conference. Irony police notified.
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