Fifteen years after its only Michigan plant was built in Caro, Poet Biorefining continues to expand operations while providing much-needed economic stimulus to the entire region.
The company recently completed a $15 million expansion that allows it to process about 20 percent more corn.
Within the next two years, David Gloer, general manager, said another expansion is possible — only about 30 percent of the 112 acres the company owns in Caro have been built out.
The expansion will be dependent on the federal government uncapping the amount of ethanol that can be produced in Caro. The company already has applied for the increase and expects to hear back any day.
If it happens, the entire area stands to benefit.
“This plant creates a lot of economic growth and sustainability to Caro and the Tuscola County economic base,” Gloer said, pointing to Poet’s frequent use of Woody’zzz Hotel, and the Brentwood for catered meetings as just two examples.
Steve Erickson, executive director, Tuscola County Economic Development Corp., said Poet’s presence in Caro also helps him make the case for other large businesses that may be considering moving into Tuscola County.
“When I’m questioned about businesses that have success here, they’re definitely one that I mention,” Erickson said, adding that the bio-based products produced by Poet are consistent with other clean energy businesses and projects in the region.
Currently, Poet employs about 50 directly in Caro – and a total of about 1,100 indirectly, Gloer said.
According to the August 2015 report from Agriculture and Biofuels Consulting, Poet’s Caro operations also account for $86 million of Michigan’s GDP (gross domestic product), generate more than $58 million in household income, and nearly $7 million in state and local tax revenue.
“This plant is a tremendous boon to the community,” Gloer said. “If you were to pluck us out of the Thumb, it would just devastate the area.”
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. Gloer said the company was launched as a result of corn prices dropping due to not enough demand.
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 28 plants, all in corn belt states like Iowa, South Dakota, Ohio, Indiana and Minnesota
The Caro plant — 95 percent owned by the company with the rest owned by local investors — was built in 2002. It was the first ethanol plant built in Michigan, and remains the only Poet plant in Michigan.
The original plant was built to produce 40 million gallons of ethanol annually.
The number is now at 67 million gallons.
That equates to about 24 million bushels of corn that is almost all from within 50-60 miles of Caro.
“From 2005 until 2016 we gradually grew the output of the plant by efficiency improvements, better techniques, better processes…we just kept making it better and better and better,” Gloer said.
About 80 percent of Poet’s business is ethanol (roughly 1.7 billion gallons annually), Gloer said, but the company also produces corn oil and animal feed (dry and wet).
“A lot of the farmers love the model because they bring the corn in and take the animal feed out,” Gloer said. “And it’s sometimes more lucrative than selling the ethanol.”
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.
The RFS program, which was made law in 2005 and expanded in 2007, sets quotas for increasing biofuel production annually. The program’s intent was to decrease hydrocarbon emissions and reduce dependence on foreign oil.
Today, nearly all transportation gasoline in the U.S. contains 10 percent ethanol.
The EPA announced in recent months that refiners need to mix 19.28 billion gallons of renewable fuel into the U.S. gasoline and diesel supply in 2017, including up to 15 billion gallons of traditional, corn-based ethanol.
But the ethanol industry faces challenges.
Successful marketing on the part of oil companies has limited the availability of ethanol — a situation Gloer said is unfortunate due to the fact that ethanol is considered a biofuel. Many consumers remain leery of claims that ethanol causes engine damage, though Gloer said that is not true.
A personal experience Gloer said he had in Caro illustrates the problem.
“I was getting a car right here in Caro, and the sales person, who didn’t know anything about me or where I worked, told me never to put ethanol in my vehicle because it will ruin it.”
Gloer said he’s encouraged by President Donald Trump’s stance on ethanol and hopeful that limitations the industry faces will lift.
He said the ethanol industry “has allowed the farmers to make a reasonable profit and continue operating today even with a surplus of grain.”
“Without the ethanol industry, farmers would face a significant loss environment,” Gloer said, adding that it’s “the exact opposite of the problem we had 10 years ago.”
Gloer said corn yields — the number of bushels produced per acre — continue to climb annually.
In the early 1970s, farmers produced about 80 bushels per acre.
Today, yields are about 175 bushels per acre, Gloer said, due to enhanced technologies, seeds, and other factors, such as better farming techniques.
“If you look at the curve, it’s going up very rapidly,” he said. “We’ll probably be at 300 bushel per acre in the next 15 or 20 years.”
Globally, more places are growing corn, too, he said.
“You have places growing corn that weren’t 15 or 20 years ago,” Gloer said. “The world’s supply of grains right now is excessive. There’s just way too much soybeans, corn, and wheat on the market.”
Corn prices have been driven down significantly. Whereas as recent at mid-2012, bushels were priced near $8, they are now at about $3.50.
The solution to the surplus problem, he said, is a continual effort to push for increases in the amount of ethanol that can be produced.
Consumers can even help, he said, by urging gas stations to carry fuels with higher ethanol content.
“The only way the industry’s going to continue growing at this point is if they continue to expand the RFS or if the price of ethanol stays low enough relative to the price of gasoline that customers demand it,” Gloer said.
Gloer points to Caro’s own gas stations as an example of the limited availability of E15 fuel (which contains 15 percent ethanol) versus E10 that contains 10 percent and offered in almost all gasoline.
“You cannot buy anything higher than E10, which is pitiful,” Gloer said. “Somehow we need to get the infrastructure selling more than just E10.”
Andrew Dietderich is editor of The Advertiser and can be reached at email@example.com