Iowa economist computes ethanol contribution at just $1 billion

Ethanol Producer Magazine
By Susanne Retka Schill January 12, 2012

Taking issue with the ethanol industry’s “overstating its net contribution to the nation’s and the individual state’s economic accounts,” Dave Swenson, Iowa State University associate scientist in economics, released his own calculations of the ethanol industry’s contribution to Iowa’s economy.

Iowa’s ethanol industry added $1 billion to the state’s economy in 2011, he said in a recently released four-page paper. The model he used documents the net addition to Iowa productivity associated with ethanol production, although it did not include corn inputs because, as the paper argues, the 1.15 billion bushels of Iowa corn used for ethanol production was already in the state, and should not be factored in the analysis. Any conclusions regarding corn price and farm profit contributions would also need to incorporate the impact on Iowa’s corn users who have been negatively impacted by high corn prices. “Rolling overall farm‐level profits into a conclusion about the impact of the ethanol industry on Iowa’s economy is, therefore, a dicey process fraught with offsets, adjustments, caveats and significant debate among agricultural economists,” the report suggests.

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