Glacial Lakes-Mina celebrates 5-year milestone

Farm Forum

Semis of corn continued to roll into the ethanol facility near Mina last week as investors and area people mingled at a milestone celebration.

As CEO of Glacial Lakes, LLC – Mina, Jim Seurer welcomed those gathered to celebrate the five-year mark for the company. “We’re proud to be part of the Aberdeen and Ipswich areas and thank the communities for the support.”

In his remarks, Seurer touched on the three biggest challenges to the industry: fighting big oil, big food and environmentalists. “There is a real possibility of losing the renewable fuel standard with those three groups fighting against this industry.”

“Big oil wants to continue to monopolize fuel choice,” said Seurer. “In the last 6 to 8 years we’ve taken 10 percent of the market. Ethanol is a cleaner burning fuel. It’s still over the top, as far as a friendly source, home grown in South Dakota and not Saudi Arabia.”

Attacks by those involved in the food vs. fuel debate will continue. With the reduction in corn prices this year, Seurer asked if anyone had seen a reduction in prices at the grocery store or restaurants.

On the environmental front, some believe that growing sugar cane in South America is better for the environment that producing ethanol in South Dakota.

Issues facing the ethanol industry

When speaking to those at the celebration, Lars Herseth of Houghton said he was wearing his hat as a northeastern Brown County corn producer. “The success of the ethanol industry is also the success of corn producers,” he explained.

Herseth said that this year’s price isn’t going to be as good as last year, but “across the state, the story is similar and ethanol gives producers a strong market for their product.” This spring he didn’t have big expectations for this year’s crop. “It’s not a bin buster for us, but close to average. We’re happy with that.”

As the past president of the American Coalition for Ethanol, he’s knowledgeable about the importance of the renewable fuels standard to farmers. Direct attacks by the oil industry who want to do away with or substantially change the RFS is a huge issue.

“This is one time that I’m glad that nothing got done by Congress,” Herseth said with a chuckle. “The future looks good for corn ethanol. New targets will be used for biofuels which will lower the requirements for cellulosics and advance corn ethanol.”

Herseth is concerned about the urban air initiative.

“It’s hard to explain in a in a few sentences, but in short, there are some small particulates still in gasoline that are very harmful to people,” he said. “Studies bear that out. If those are taken out, then the cheapest octane booster is ethanol, with a higher compression for turbo engines. With the need for more octane, the cheapest source is ethanol.”

Herseth predicts a bright future for ethanol.

“We can’t let our guard down against the attacks being leveled by big oil companies,” he said. “You

really can’t blame them. They are fighting tooth and nail for the fuels market in the U.S. Ethanol is replacing their sales. When levels go from 10 to 15 percent or more, those are sales that they would have made. We have to win our battles with numbers.”

“I encourage producers to stay involved with industry trade groups and support decisions in that direction,” he said. “The South Dakota Corn Growers are very supportive and deserve credit for the ethanol industry. Checkoff dollars are used to support that. I encourage farmers to leave checkoff funds with the corn utilization council to continue to fight the battle.”

Lars said he visited with some of the Mina board members while at the celebration. “Glacial Lakes has weathered some tough years,” he said. “This has been a pretty good year for them as they have paid down a lot of debt and are on much better financial ground. This bodes well for those who have invested in Glacial Lakes.”

“We’ve had our ups and downs, like most industries have,” Brent Gabler of Faulkton, one of the Glacial Lakes directors, said. “Management is doing a good job, and we had a really good meeting at Mina. Manager Jim Seurer told us where we are standing financially.”

“We’ve been able to pay down some debt and are in a very good position,” Gabler said. “We’ve had a very good year, and made up for the year before. And that’s in spite of the high price of corn. The price of corn and ethanol weren’t working together, and we worked through that.”

Gabler said the company is concerned about the reach of big oil which is trying to control Washington. “They’ve tried to get rid of the Renewable Fuel Standard, but they haven’t gotten it done,” Gabler said. “Those big oil concerns do have a lot of money so there is a need to watch out for them.”

Seurer provided this additional information:

“We installed a corn oil separation unit last fall (2012) to exponentially add more value to our process and this has been a very good investment for us with a return of our invested funds in less than 12 months,” said Seurer. “ This past summer, we also installed particle sizing (fine grind) technology that will allow us to access more starch and improve yields. We recently paved the plant roads all the way to the corn receiving area to keep mud and gravel from entering our process flow. We believe this will pay dividends by improving production consistency and performance as well as reduce expensive repairs and maintenance by extending the life of our process equipment.”

Seurer said that it takes roughly 50 employees to operate the Mina plant which is in line with other production facilities and represents a payroll of approximately $2.6 million. “Our liability for property taxes is approximately $300,000, and we estimate that we pay $2.8 million in state and local sales taxes on good and services purchased,” he said. “If we were to extrapolate the $3.8 billion total economic impact of our industry statewide and apply it to the Mina plant, we would arrive at a total economic impact of approximately $380 million for the Aberdeen area (Mina represents about 10% of statewide production).”

There are approximately 4,200 shareholders in the parent corporation, Glacial Lakes Corn Processors, and these investors are invested in both the Mina and Watertown plant facilities. The company also owns 8% of Redfield Energy and about 14% of Granite Falls Energy (Minnesota). The majority of shareholders reside in eastern South Dakota, and stock trades daily on

Ethanol is shipped to the most profitable markets. Seurer said at times it is shipped domestically to the West Coast (Calif.) and Texas. In the past, the company has been very proficient in producing ethanol that meets export specifications, and this has been shipped to 12-15 foreign countries including Brazil, Philippines, Europe, and even some Middle Eastern countries.

With the high price of corn last year, some ethanol plants shut down or scaled back this last year. Seurer said the primary reason a plant would have shut down or scaled back would be due to financial difficulties (high debt levels) and/or limited availability of corn supply. “We had a plentiful supply of corn, and we have made significant strides improving our financial condition. We have reduced our company wide debt by over $110 million in the past 4 years,” he said.

“We want to assure everyone that GLE is here to stay,” Seurer said.