The Grain Farmer
The Men Who Turned Corn into Gold
Dressed in mud- and manure-spattered coveralls and driving a dusty tan pickup, Bill Couser could easily be mistaken for just another Iowa farmer. And he does grow 5,000 acres of corn and soybeans and feeds more than 4,000 head of cattle each year on the outskirts of an Iowa town called Nevada. But Couser, 52, is also an energy entrepreneur, a co-founder of Lincolnway Energy, a corn-ethanol distillery owned largely by small-time investors from across his home state. Lincolnway began producing the gasoline additive in May. This month it sends its first quarterly dividend checks, $150 per share, to investors. "That's a 60% return on an annual basis," says Couser. "Not too shabby."
Couser belongs to the growing ranks of rural denizens from New York to California who have invested their cash and hopes in ethanol as the farmer's eco-friendly answer to global warming and foreign oil. Like dozens of similar plants across the U.S., Lincolnway has proved a boon to the local economy. It has created 40 jobs (85% filled by locals), a lush cash stream for corn farmers (who also own 40% of the company) and new customers for Nevada's small businesses, where many of the lately flush farmers shop.
Some 2.1 billion bushels of corn harvested in the U.S. this season will go into ethanol, twice as much as did in 2002. That volume is expected to grow by an additional billion bushels next year. Despite a bumper harvest this year, corn is selling at a 10-year high of well over $3 a bushel (compared with the recent norm of around $2). And the Big Three carmakers say they intend to expand production of flex-fuel vehicles, which can use gas that is 85% moonshine. Toyota too is eyeing that market.
Yet the stunning expansion of the ethanol industry — supported by a 51 cents per gal. subsidy and a federal mandate to pour 7.5 billion gal. of the stuff into the nation's fuel supply by 2012, up from roughly 5 billion gal. today — has not come as good news to everyone. Pork and poultry producers are feeling the pinch of rising corn prices. At least 65% of the cost of raising a pig comes from feed; Tyson CEO Dick Bond has warned that the climbing costs will soon be felt in grocery bills.
So, is corn alcohol the answer to America's energy thirst? "Converting every corn kernel we produce to ethanol," says Jason Hill, a researcher at the University of Minnesota, "would offset only 12% of the gasoline we use." Environmentalists concede the point but say that as the biotechnology advances, ethanol will be made on a large scale from farm wastes like corn leaves and stalks. Construction of the first U.S. commercial plant producing such "cellulosic" ethanol begins in Iowa in February. "When you look at Iowa right now," muses Couser, "we are the Kuwait of renewable fuels."
— Additional reporting by Betsy Rubiner/Nevada