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The Impact of Increased Ethanol Production on Corn Basis in South Dakota

Author

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  • Olson, Andrea
  • Klein, Nicole L.
  • Taylor, Gary

Abstract

A basis model is used to empirically estimate the impact of ethanol production on the South Dakota corn basis on the district and "State" levels. Monthly data is used to estimate basis as a function of futures price, supply, demand, storage, and transportation costs. The independent variables used are corn futures prices, corn production, corn usage for ethanol production, corn usage by cattle, Midwest No. 2 Diesel retail sales prices, storage availability, and unit train transportation The regression results show the impact on corn basis varies by district from $0.04 to $0.27 per bushel, with a "State" impact of $0.24 in 2005. The impact from an additional 40 million gallon per year (MGY) ethanol plant ranges from $0.06 to $0.16 per bushel, with a "State" impact of $0.03. The impact from an additional 100 MGY ethanol plant ranges from $0.16 to $0.40 per bushel, with a "State" impact of $0.08.

Suggested Citation

  • Olson, Andrea & Klein, Nicole L. & Taylor, Gary, 2007. "The Impact of Increased Ethanol Production on Corn Basis in South Dakota," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 10255, Western Agricultural Economics Association.
    • Handle: RePEc:ags:waeapo:10255
    DOI: 10.22004/ag.econ.10255
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    Cited by:

    1. Xiaodong Du & David A. Hennessy & William M. Edwards, 2007. "Determinants of Iowa Cropland Cash Rental Rates: Testing Ricardian Rent Theory," Center for Agricultural and Rural Development (CARD) Publications 07-wp454, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Liu, Bing & Hudson, Darren & Farmer, Michael, 2015. "The Impact of a Sorghum-Based Ethanol Plant on Local Cotton Acreage: A Spatial Approach," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229799, Southern Agricultural Economics Association.
    3. Harthoorn, Austin & Walters, Cory G. & Brooks, Kathleen R., 2022. "Ethanol plant vs. local elevator: what is the value to Nebraska Corn producers?," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322457, Agricultural and Applied Economics Association.
    4. Ben H. Blomendahl & Richard K. Perrin & Bruce B. Johnson, 2011. "The Impact of Ethanol Plants on Surrounding Farmland Values: A Case Study," Land Economics, University of Wisconsin Press, vol. 87(2), pages 223-232.
    5. Turnquist, Alan & Fortenbery, T. Randall & Foltz, Jeremy D., 2008. "Progress or Devastation? The Effects of Ethanol Plant Location on Local Land Use," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6125, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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    Keywords

    Crop Production/Industries;

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