Grassley: $12.5 million federal loan for new ethanol plant in Iowa


? Sen. Chuck Grassley said Secretary of Agriculture Ann Veneman on Friday will announce a $12.5 million federal loan for construction of an ethanol production facility in Northwest Iowa.

The loan will go to the Quad County Corn Processors Cooperative for an 18 million gallon per year production facility in Galva, Iowa. The plant is expected to start processing ethanol in January 2002. The 416 members of this cooperative have contributed $8.5 million of equity capital toward the construction project. The federal Business and Industry guaranteed loan was approved based on feasibility research completed by private consulting firms, Iowa State University and Stearns Bank.

"The Bush administration has made a good decision in backing this loan to expand ethanol production in Iowa," Grassley said. "Ethanol is good for Iowa corn growers, the rural economy, the environment, and America's energy independence."

According to USDA, the decision to back the loan with a 60-percent guarantee for the Quad County Corn Processors Cooperative was based on the following.

  • The plant will be located close to area feedlots and dairies, which will provide a ready market for wet distillers' grains.
  • The Quad County area has an abundance of corn, which comprises 88 percent of the variable costs for ethanol. As a result, the location is among the least expensive corn markets in the country.
  • The coop will allow wet corn delivery to the plant bunker at harvest, which will provide savings to its members in handling and drying costs.
  • Iowa has one of the highest fuel ethanol market shares in the country.

    Last week, the Environmental Protection Agency denied a request by the state of California to waive the federal oxygen content requirement for reformulated gasoline. The denial of an oxygenate waiver is expected to sharply increase demand for ethanol as refiners decrease the use of the oxygenate MTBE in reformulated gasoline. California is expected to ban the use of MTBE starting in 2003 due to concerns that the oxygenate contaminates water supplies. According to the Renewable Fuels Association, it will take roughly 580 million gallons of ethanol to meet California's entire demand for reformulated gasoline oxygenates in 2003.