Estimates show 19 cent increase to local corn basis
ONIDA, S.D. (May 22, 2023) – Proposed carbon pipelines would raise the premium on corn for South Dakota farmers and inject nearly $6 billion in gross output for the state over a 10-year period, according to a study released today.
The report, commissioned by the South Dakota Ethanol Producers Association, seeks to quantify the economic impact of the proposed Summit and Navigator pipeline projects, which together would cross 25 counties in eastern South Dakota and connect to 13 of the state’s 16 bioethanol plants.
Findings in the study demonstrate that a 15 percent increase in biofuel production drives economic growth.
- An average increase to the corn basis of 19 cents per bushel in South Dakota
- Increased bioethanol production of 217 million gallons annually
- Increase of 77 million bushels of corn demand
- Increase in gross output of $5.92 billion for the state of South Dakota over a 10-year period
- A total of 7,105 jobs from 2024-2034
“When you increase production at a bioethanol plant, it increases corn demand in the area around that plant,” said Walt Wendland, President of the South Dakota Ethanol Producers Association and President/CEO of Ringneck Energy in Onida, S.D. “When you apply that proven effect to these projects in South Dakota, the results for farmers are dramatic.”
The research, conducted by Dakota Institute in Sioux Falls, estimates the economic impact over the 10-year period from 2024-34 under different scenarios for increased bioethanol production. It looks at areas including employment, personal income, gross economic output and state GDP.
“The economic impact of these projects is significant for the entire state during both construction and operation. Our findings show increased economic activity in construction, retail trade, manufacturing and other industries,” said Jared McEntaffer, CEO of Dakota Institute. “On an individual level, the most profound impacts will be felt in areas near bioethanol plants.”
The Navigator and Summit pipeline projects would collect CO2 captured at bioethanol plants and transport it for long-term underground storage. This process, called carbon capture, utilization, and storage (CCUS), lowers the carbon intensity of bioethanol produced at those facilities.
CCUS allows bioethanol to better participate in low-carbon fuel markets and take advantage of national incentives. The research looked at three scenarios – 10, 15 and 20 percent – for increased bioethanol production in South Dakota. The mid-range 15 percent scenario was deemed the most likely scenario by bioethanol producers.
“Agriculture has changed the fuel landscape in the 21st century through bioethanol, and energy remains the best opportunity for growth” Wendland said. “These projects will have an immediate impact on both bioethanol and agriculture and position our industries for an even brighter future.”