Farmer-backed Ethanol Plant Opens Despite Economy

Long road to operation finally over for Cardinal Ethanol.

Published on: Nov 13, 2008

A downturn in the fortunes of the ethanol industry didn't stop a group of enthusiastic farmers from opening the plant conceived around the kitchen table in a farm home several years ago. The long road to a farmer-backed ethanol plant became reality last week when Cardinal Ethanol, LLC, officially began production.

It's also important for Indiana. Cardinal Ethanol is the 12th ethanol facility in Indiana now in production. This plant is scheduled to produce 100 million gallons per year, making Indiana the fifth largest producer of ethanol in the U.S., at 1.1 billion gallons per year. All that from a state that wasn't even on the alternative fuels horizon four years ago.

Part of that change in direction traces back to support from Governor Mitch Daniels, Secretary of Agriculture Becky Skillman and the new Indiana State3 Department of Agriculture, itself less than four years old. But part of the credit also goes to farmers and businessmen who looked for new markets for corn, and for a way to keep part of the profit potential in producing value-added products at home in Indiana.

According to sources at Cardinal Ethanol, the new plant represents an investment in the facility alone of $150 million, making it the largest investment by a corporation in Randolph County in east-central Indiana. Cardinal Ethanol LLC is based out of Union City. Corn purchased to make ethanol comes from both sides of the Indiana/Ohio state line.

When running at full capacity, the spokespersons expect the plant to utilize nearly 36 million bushels of corn annually. At the same time, it will produce 340,000 tons of dried distillers grains with solubles. Those will be marketed to livestock operations. The plant when at full steam will also employ about 48 people, sources note. Those are full-time positions, to be filled with primarily local workers.

Cardinal elected to begin operation during the same week that a major U.S. player in ethanol production, Vera-Sun, announced financial difficulties. Rumored for weeks, the corporation finally acknowledged that it was seeking protection under bankruptcy laws, and suspended completion of a plant in Wisconsin.

Industry sources say that Vera-Sun has procured the funds to operate for now under bankruptcy. Problems began for the large ethanol player after decisions related to corn hedging during the volatile market last summer went sour.

Sources inside the feed industry indicate it's still too early to tell what the long-term future for Vera-Sun may be.