MINDEN, Neb. (DTN) -- Rural America has seen its fair share of heartache from ethanol plants closing down and taking jobs with them. But Nebraska-based KAAPA Ethanol, LLC, has managed to stay the course and continues to live up to the hope it brought to the surrounding communities when it was founded in 2002.

One of the first ethanol projects in Nebraska, KAAPA is located near Minden and is the largest farmer-owned ethanol plant in the state. (DTN Photo by Elaine Shein)

One of the first ethanol projects in Nebraska, KAAPA is located near Minden and is the largest farmer-owned ethanol plant in the state.

During the past year, corn prices and high energy costs forced many ethanol plants' profit margins to plunge. But while some plants closed their doors or claimed bankruptcy, KAAPA was able to avoid these fates.

KAAPA Chief Executive Officer Chuck Woodside attributes that to the plant's conservative approach to finances as well as hiring quality personnel that run the plant efficiently and consistently.

"We have been financially conservative with respect to paying down debt," he said. "Debt service is a big problem for some plants. Business is cyclical -- you will have good and bad times. You just can't enter bad times with a lot of debt."

Woodside believes KAAPA has been an asset to the surrounding communities and has delivered on the commitment it made in the beginning.

Minden Mayor Roger Jones agrees.

"From an agricultural standpoint, I think KAAPA has been tremendous in creating outside markets for farmers for corn," Jones said. "For stockholders, KAAPA has been extremely successful financial as far as investments go."

Some aspects of establishing the plant have been tricky, such as the complicated processes involved with the tax increment financing, Minden's annexation of the land and working out fire protection coverage.

But overall, Jones said the plant has been positive in terms of creating business and good jobs for area residents.

"I think KAAPA has been a tremendous asset to the area and will continue to get better as long as renewable fuels remain viable," he said.

The profitability of KAAPA Ethanol has translated back through the local economy. The nearly 500 shareholders -- the majority are area farmers -- have profited from the plant's revenues. And KAAPA pays about a million dollars in taxes annually.

The plant has added jobs to the area, beginning with those created during construction. Now it has nearly 50 full-time employees. KAAPA employs 40 workers, with some additional staff in nearby Elm Creek where the plant owns a grain elevator. Although a few of the employees also farm on the side, for most employees, KAAPA is their primary job.

Area companies that KAAPA does business with have found the plant to be a boost to the local economy as well, as the plant tries to utilize as many local businesses as they can, Woodside said.

During construction, the plant utilized such businesses as concrete and rental companies and supported local restaurants, grocers, gas stations and convenience stores. Now, KAAPA buys as much of their needs as possible from local businesses including natural gas, oil, diesel fuel, anhydrous ammonia, hardware, lumber and auto parts. It also uses local facilities for meetings.

When operations began in November 2003, the plant had a 40-million-gallon capacity, Woodside said. After several expansions, the facility now produces 60 million gallons of ethanol. It creates a huge market for area corn farmers.

KAAPA buys all their corn from within a 30 miles radius of the plant. The plant's prices for corn are competitive, consistently ranging between two and three cents above the competition, Woodside said. Corn accounts for about 75 percent of the plant's expenditures, and the plant grinds approximately 20 million bushels of corn per year. So, if the plant pays $3 per bushel of corn, it puts about $6 million into the local economy.

Wayne Anderbery farms land almost adjacent to the KAAPA plant and is a stockholder in the company. He said the plant has provided a good, steady market for corn for area farmers, attributing that to the fact that KAAPA is producer-owned and is "very well managed." He said he feels that the plant has improved local corn basis.

Anderbury sells most of his corn in storage to the plant, but said whether or not farmers sell their corn to the plant depends on how much grain storage they have.

"If you've got storage, the ethanol plant works for you. If not, you will be marketing through the elevators because you can't store your crop," he said. "That's why we built grain storage, so we have an opportunity to use that access."

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com

(CZ/KM)

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