Author ORCID Identifier

https://orcid.org/0000-0002-7307-4073

https://orcid.org/0000-0002-5292-8551

Document Type

Article

Publication Date

2019

College/Unit

College of Business and Economics

Department/Program/Center

Division of Resource Economics & Management

Abstract

settings Open AccessArticle

Impact of Ethanol Plant Location on Corn Revenues for U.S. Farmers

by Ani L. Katchova 1,* andAna Claudia Sant’Anna 2 1 Department of Agricultural, Environmental, and Development Economics, The Ohio State University, Columbus, OH 43210, USA 2 Division of Resource Economics and Management, West Virginia University, Morgantown, WV 26506, USA * Author to whom correspondence should be addressed. Sustainability 2019, 11(22), 6512; https://doi.org/10.3390/su11226512 Received: 22 October 2019 / Revised: 11 November 2019 / Accepted: 15 November 2019 / Published: 19 November 2019 (This article belongs to the Special Issue Green, Closed Loop, Circular Bio-Economy) Download PDF Browse Figures Cite This Paper

Abstract

Ethanol production has rapidly expanded over the past few years. The opening of an ethanol plant can increase local demand for corn, pressuring increases in local corn basis. But how does this affect corn contract prices and revenues? At the farm level, the impact of an ethanol plant on local corn contract revenues is still unknown. Data from the USDA Agricultural Resource Management Survey suggests that corn contract revenues in counties with ethanol plants are higher than corn contract revenues in counties without ethanol plants at similar prices. We estimate the impact of ethanol plants on local corn contract revenues by running non-spatial and spatial difference-in-difference models. A statistically significant effect of ethanol plant location on corn contract revenues within the same county was not found, but rather a statistically significant effect of ethanol plants on corn contract revenues for farmers located in adjacent counties. Local competitive advantage, not the presence of an ethanol plant, may be the reason for observed higher revenues in counties with an ethanol plant. Therefore, policymakers should focus their resources in promoting greater efficiency in corn production to boost farmers’ revenues.

Source Citation

Katchova, A. L., & Sant’Anna, A. C. (2019). Impact of Ethanol Plant Location on Corn Revenues for U.S. Farmers. Sustainability, 11(22), 6512. https://doi.org/10.3390/su11226512

Comments

© 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).

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