Growers Support Ethanol, Oppose Excise Tax

Ethanol and agriculture advocates filled Kansas House Taxation Committee at a hearing Wednesday on HB2401, which would create a .0433 cent excise tax on ethanol told the committee that the tax would cripple Kansas ethanol plants. At a hypothetical price of $2 per gallon, a plant producing 50 million gallons per year would pay $4.33 million in excise taxes.

Kansas Corn Growers Association CEO Greg Krissek explained to the committee that Kansas ethanol plants operate on smaller margins than plants in other states. The plants also produce wet and dry distillers grains which have benefited the plants as an income stream, and livestock feeders as a high quality feed. Not only would the tax hurt the ethanol plants and the economic benefits they have brought to their communities and the state, it would also hurt grain producers who sell their corn and sorghum to the plants,  and livestock feeders who rely on the high-nutrient distillers grains.

Ethanol producers explained the positive economic benefits and jobs ethanol plants have brought to their communities and the state.  The tax could force plants to close, and would make improvements and upgrades to existing plants nearly impossible. Mike Chisam, general manager of the Kansas Ethanol plant in Lyons explained the work being done at his plant including a fiber separation process, and his hope to make cellusic ethanol as well as conventional ethanol. A tax like this would put an end to Kansas plants investing in these types of improvements.  Derek Peine at Western Plains Energy told the committee that Kansas ethanol plants have brought economic growth to Kansas, adding that his plant near Oakley has 55 employees, making it a major economic driver in the area. He said the tax would make it impossible for Kansas plants to compete with other states. Testifying for Kansas Farm Bureau, Bill Greving, a grain and livestock producer near Phillipsburg, said that he relies on distillers grains for feeding his livestock and that the high quality feed saves his operation $20 per head in feeding costs. He added that he is involved in economic development efforts in Phillips County and said the Prairie Horizon ethanol plant in Phillipsburg is an excellent example. “We have a big economic development program in Prairie Horizon.”

In addition to the ethanol plants, Kansas Corn Growers Association, Kansas Agricultural Alliance, Kansas Farm Bureau, Kansas Association of Ethanol Processors and Kansas Grain Sorghum Producers Association all provided testimony against the excise tax.