Rural Economy

Ethanol Renewing the Heartland

While the broader rural economy participated in national growth trends following passage of the Tax Cuts and Jobs Act in December 2017, the agriculture sector continued to struggle in 2018. The crop sector endured its sixth consecutive year of reduced cash receipts, as a trade dispute with China hit soybean producers particularly hard. Additionally, growers felt the effects of rising interest rates, as farm debt reached levels one-third higher than early in the decade.

According to Creighton University, farmland prices and farm equipment sales continued to be weak spots in the rural economy, and a survey for its Rural Mainstreet Index found, “Approximately one-fifth of bank CEOs expect low farm income and falling farmland prices to present the greatest challenge to banking operations over the next 5 years.”

While the renewable fuels industry also was affected by the trade dispute with China, the export market overall remained a bright spot and production reached a record 16.1 billion gallons. The industry provided a critically important market for corn and sorghum producers and bolstered rural incomes. 

In 2018, the ethanol industry directly employed 71,367 American workers, and it supported an additional 294,516 indirect and induced jobs across all sectors of the economy. The industry created $25 billion in household income and contributed $46 billion to the national Gross Domestic Product (GDP). Moreover, the renewable fuels industry generated nearly $10 billion in federal, state and local taxes, and spent over $26 billion on raw materials, inputs, and other goods and services. 

Consistent with the industry’s role of contributing to America’s energy independence, almost one-quarter of the people employed by the industry are veterans of the U.S. military – nearly four times the rate of the U.S. workforce as a whole. 

With new ethanol facilities starting up production and existing facilities expanding, the industry will continue to provide additional employment opportunities and add value to farm products. 

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