Investors in northern Iowa have until tomorrow (Thursday) to finish voting on the proposed sale of a majority interest in their farmer-owned ethanol plant at Lakota, in Kossuth County. An Australian firm has offered to buy the plant and another in Michigan, and the “full disclosure” papers went out to the owners on March 15. The firm, Global Ethanol, wants to buy 60-percent of the two plants built by Midwest Grain Processors.
One of the farmer-owners who wants more time to look over the proposal is Gary Garst of Buffalo Center. Garst says he doesn’t have any particular objection to foreign investment, and to venture capital coming into the state. He says the farmer-investors started with local, state and federal incentives, built the plant, and weathered some hard times.
With the federal energy bill’s emphasis on renewable energy, and the gasoline additive M-T-B-E being phased out, demand for ethanol is expected to skyrocket. The plant is now coming into one of the most profitable periods in ethanol history. Next year, Garst says managers tell them it’ll make fifty-Million dollars. But the Australian buyer has made a generous offer, a hundred Million dollars, and some other investors say it’s a global economy and they should sell now.
Dave Nelson, a farmer from Belmond, is chairman of Midwest Grain Processors and supports the sale. Nelson says he knows a lot of people think the vote deadline came fast, but he says there are a lotof reasons for speed, mostly monetary ones. Also, with spring around the corner there’ll be lots of farmers in the field and he says “we don’t want to bother them then.”
But Garst says with thirty-million in projected profits, a fifty-million-dollar buyout doesn’t sound so impressive. If the plan goes through, Garst says the Australians’ 100-Million-dollar investment could yield them 30-Million dollars the first year. He says perhaps the investors should hang onto that for their Iowa membership. Garst remarks, “Wouldn’t that be a nice big dividend.” Garst says he’s concerned about a loss of local control with a foreign owner.
Lakota, a town of 250 people in Kossuth County, is about 20 miles northeast of Algona. The M-G-P plant there began production in November of 2002 and processes 34-Million bushels of grain a year. Its 1300 investors are from twelve states including Iowa.