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Ramped-up Ethanol Production Leads To Silo Construction Boom

DORCHESTER, Neb. (AP) _ Other than two bars and a bank, there's little activity on Washington Street here. More windows are covered by boards than ``Open'' signs.

But at the end of the street, semitrailers stir the dust near a concrete symbol of economic activity _ a 132-foot-tall silo that can hold a half-million bushels of corn.

Here and across other Corn Belt states with struggling rural areas, rising corn production driven by demand and higher prices _ both due in large part to ramped-up ethanol production _ are doing more than feeding farmers' bank accounts. In areas where new construction is rare, a historic construction boom of large grain silos is under way.

``Almost any company of any consequence in the grain industry right now is adding storage, and it's directly related to ethanol production,'' said Dave Fairfield of the National Grain and Feed Association, a large trade group.

Last year, total grain storage capacity increased by nearly 298 million bushels in the top four corn-producing states of Illinois, Iowa, Nebraska and Minnesota _ up 3.4 percent from 2005, according to the U.S. Department of Agriculture. In Nebraska alone, off-farm grain storage jumped 6 percent and total capacity by more than 62 million bushels during the year.

More corn is being grown and more of it is going to ethanol plants in Nebraska and elsewhere. The amount used for ethanol increased by 575 million bushels last year and comprised more than 18 percent of total corn use in 2006, according to the National Corn Growers Association. That's up from 14.6 percent in 2005.

Over the last two years, the Midwest Farmers Cooperative has overseen the construction of 2.3 million bushels of additional grain storage space, mainly steel silos.

``That would be more storage than was built in the previous 15 years,'' said Dale Piper, general manager of the cooperative, which has 14 locations in southeast Nebraska.

``In a number of communities, we're the only employer. We're happy we're able to keep serving some of these places that wouldn't have anything.''

High corn prices are persuading some farmers to increase their plantings at the expense of some other crops. The bulky grain requires more storage space, and yields per acre are also higher, thanks to advances in genetics.

Much of that extra corn is feeding nearby ethanol plants, so more corn is staying closer to where it is planted. In Nebraska, there are about a dozen plants operating, 15 under construction and several more being planned.

``You have to have the facilities to feed the market throughout the year,'' said Randy Robeson, general manager of Frontier Cooperative, which built two 700,000-bushel silos in Mead last year.

The largest manufacturer of steel storage tanks in the world, GSI Group, saw sales increase more than 20 percent each of the last two years. It anticipates sales this year could jump 30 percent over last.

``Year after year we often saw single digit to low, double-digit increases'' in sales, said Burl Shuler, GSI's vice president for sales and administration. ``For two years in a row, to see that kind of growth is unprecedented.''

While some, including Fairfield, believe an ethanol-fueled increase in grain storage has not yet reached its apex, others see signs of it waning because of concerns about water supplies.

Corn requires more irrigation than most crops and significant amounts of water are needed for ethanol production. Some corn states such as Kansas and Nebraska face severe water problems in some areas.

The current increase in grain storage construction is the sharpest that Lawrence Scanlan, sales manager of Kansas-based Frisbie Construction Co., a major builder of grain silos, has seen in his 37 years in the business.

But, he said, ``you can't make ethanol if you don't have the water.''
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