Poet Biorefining plans $15M expansion in Caro

IMG_1629 (1)CARO — Poet Biorefining plans to invest $15 million in its Caro plant to increase production by 20 percent, add jobs, and buy even more corn from Michigan’s Thumb region.

David Gloer, general manager, Poet Biorefining in Caro, said ethanol production will increase from 58 million gallons per year to 67 million gallons per year.

Once completed, Gloer said, 10 new high-paying jobs will be added in Poet’s Caro plant – bringing the total to about 60.

The amount of corn needed will increase from about 20 million bushels a year to about 24 million, with all of the corn coming from Michigan’s Thumb region.

“This particular plant happens to be in the right spot, with the right technology, and was built at the right time,” Gloer said. “Basically, it’s a honey hole location.”

Ethanol is an essential component of the U.S. gasoline market. When blended with gasoline, ethanol increases octane ratings, reduces production costs, and facilitates compliance with emissions and fuel efficiency standards.

Gloer said Poet’s Caro plant was built in 2002 for about $100 million.

He said  Poet’s Caro locations has the latest technologies for producing ethanol, which makes the plant more efficient.

The location of the plant and local market prices also make it worthwhile for Poet to invest in its Caro location, Gloer said.

“The Caro plant continually earns money, even when the rest of the industry loses money or breaks even,” Gloer said. “The plant continues to earn a decent profit, even when the economics are bad for the industry.”

The expansion plans will require installation of new equipment to handle the increased capacity, Gloer said. Those who drive by the plant (located off of M-81 southwest of downtown Caro) will see construction equipment within the next two weeks. The new equipment installed will include a new hammer mill, a new fermenter, and at least one new tank, Gloer said.

“It’s great news for Caro and the surrounding area,” said Carl Bednarski, who farms in Tuscola County and is president of the Michigan Farm Bureau. “It’s not just good for the farmers, but the entire local economy and Thumb area.”

Bednarski said there are other benefits to having Poet so close to home.

“That commodity (corn) can be grown for a specific market, which adds value to that commodity,” Bednarski said.

Gloer said the 58 million gallons of ethanol produced annually in Caro requires about 20 million bushels of corn. The added capacity of 12 million gallons will require an additional 4 million bushels.

That’s good news for farmers like Richard D’Arcy, of D’Arcy Farms Inc., 6750 McAlpine Road, Kingston.

“It’s consistency,” D’Arcy said. “They need corn all the time.

“It helps us plan our logistics as far as freight and it helps us plan our future cash flow needs so we can pay our bills,” D’Arcy said.

D’Arcy Farms consists of about 2,000 acres. D’Arcy said about 40 percent of the land produces corn and most of that is sold to Poet.POET Ethanol Graphic 2-27-16

Poet’s Caro plant spent $85 million on corn in 2014, accounting for 74 percent of the company’s total expenditures locally, according to an August 2015 report from Agriculture and Biofuels Consulting LLP.

Fred Ruggles, owner, Ruggles Beef Farm, 5721 Sanilac Road, Kingston, is another farmer who sells corn to Poet — about half of the corn from his 1,100-acre farm that isn’t used for his beef operation.

Ruggles said he has sold to Poet since the company opened shop locally in 2002.

He called Poet’s continued investment in the area a great thing.

“We grow about 1,100 acres of corn and probably use 500 or 600 acres in our beef operation,” Ruggles said. “What we don’t use we sell to Poet. It’s been great to work with them over the years.”

Poet Biorefining was founded in 1986 and is based in Sioux Falls, South Dakota.

The privately owned company was started in Wanamingo, Minnesota, by Broin Farms.

By 1990, the company – then known as Broin Cos. – had grown to produce one million gallons of ethanol a year and had to expand its first plant in Scotland, South Dakota.

The company’s name was changed to Poet in 2007. It isn’t an acronym, but refers to the way poets take “everyday words and turns them into something valuable and beautiful,” according to its website.

Today, Poet has 27 plants producing about 1.7 billion gallons of ethanol annually.

The Caro plant – 95 percent owned by the company with the rest owned by local investors – was built in 2002.

Sen. Mike Green, R-Mayville, said it took some work to get the company to build a plant in the area originally, but “it’s been a good marriage” between the community and Poet.

“It’s been good for the community, they’ve provided good jobs, and I don’t think the smell is as bad as everyone predicted,” Green said. “By them expanding here in the Thumb is a good sign that this is a good place to settle and expand.”

Green said it’s important to note that the impact of Poet on the local economy is not limited to farming operation.

According to the August 2015 report from Agriculture and Biofuels Consulting, Poet’s Caro operations account for $86 million of Michigan’s GDP (gross domestic product), supports nearly 1,100 full-time equivalent jobs in various sectors of industry, generates more than $58 million in household income, and nearly $7 million in state and local tax revenue.

The 1990 Clean Air Act — and other mandates such as the U.S. Environmental Protection Agency’s Renewable Fuel Standard (RFS) – have created a market for cleaner fuels and continually spurred the industry’s growth.

“In general, ethanol is leading us to be less dependent on oil,” Bednarski said. “Having a renewable source of fuel, and putting it into our energy products, helps the economy out nationwide.”

Bednarski and Gloer both said separately that they spend time lobbying for legislation that favors the ethanol industry.

It’s necessary because there are being arguments made against it.

For example, animal producers say their costs are getting higher.

An official from the National Chicken Council recently told Congress that the rise of ethanol is detrimental to the animal producing industry as feed costs have risen.

And Jeff Broin, CEO of Poet, wrote in a letter to the editor of The Advertiser (see page A4) that “the oil industry is coming after farmers.

“(The oil industry) wants a lower market share for Midwestern-grown fuel, and if it has its way we’ll see higher prices at the pump, more money overseas for imports and depressed income/land values in Michigan,” Broin wrote.

On Nov. 30, 2015, the EPA set the RFS at 14.5 billion gallons for 2016 – up from 14.1 in 2015. However, industry reports indicate the amount was originally going to decrease in 2016.

Broin urges voters to find out what candidates are pro-agriculture.

“We can see this Oil vs. Ag fight playing out on the campaign trails, and with the caucuses nearing, this is the opportunity for Midwestern renewable fuel to land a punch,” Broin wrote.

Andrew Dietderich is editor of The Tuscola County Advertiser and can be reached at andrew@tcadvertiser.com

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