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Industry Leader: NuGen Energy Provides Opportunities for Small Community
by Rachel Gerber

NuGen Energy, LLC is a locally owned, 110 million gallon per year ethanol plant in Marion, South Dakota. Its mission: to anticipate, meet, or exceed patrons’ expectations while providing local profitability.

Marion-based Central Farmers Cooperative took ownership of NuGen on July 31 of last year, coming full-circle to where the idea for the ethanol plant first began.

NuGen was initially owned by the local co-op, but was bought out by United Bio Energy (UBE) in 2007. Soon after, VeraSun Energy Corporation purchased UBE, but VeraSun went through bankruptcy in the fall of 2008 after an arduous economic period. The Marion plant was not part of the package of VeraSun plants purchased by the refiner Valero, and instead returned to the hands of its original shareholders – South Dakota farmers.

Aaron Riedell, NuGen’s plant manager, is confident in the change from a large organization to a smaller, locally owned one.

“Historically, larger groups rise and fall with the growing pains of the industry,” Riedell said. “In my eyes, the smaller groups are able to survive the storm with more focus at the plant level and give more attention to detail.”

Riedell explains that the change in ownership has allowed the plant a great learning opportunity to reap the benefits of local ownership and a familiarity with the large industry.

“Groups that start as a stand-alone need time and effort to get to know the industry,” Riedell said. “The right and wrong is much easier to observe with a larger group. You can look at many other large plants and learn from them in the first year it starts up. But over time, I believe the value is less with the larger plants. We are at an ideal position. We can learn from our mistakes in the larger industry and take advantage of the small group benefits.”

Local ownership brings important employment opportunities to the community of Marion and the surrounding area. NuGen has a staff of 53 and is associated with more than 3,000 area farmers. The town of Marion, with just shy of 900 residents, has seen at least ten employees of the ethanol plant move to town. More people and more economic activity translate to more local spending in Marion, along with greater tax revenue.

Central Farmers Cooperative also benefits from this direct relationship with NuGen by providing another outlet for farmers to market their crops. Jim Wahle, local farmer and Vice President of Central Farmers Co-op, describes the value of cooperative ownership as a personal relationship between plant and producer.

“A co-op provides local control and decision-making,” Wahle said. “With local ownership, the plant feels a responsibility to the patrons to succeed. That same responsibility is not felt in a larger plant.”

Wahle recognizes the trials of transition with less opportunity to access operating capital than a larger company. In a struggling economy, it can be difficult for smaller plant to compete with large industry prices, Wahle says.

The co-op is looking forward to a stable future and is hopeful in regards to the ethanol industry.

“Being less than a year old, we are still getting comfortable with the logistics of the plant, but we strive to become secure enough to begin giving back to our community,” Wahle said. “We are getting there. Overall it is a good change and benefits the community greatly.”

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The American Coalition for Ethanol publishes Ethanol Today magazine each month to cover the biofuels industry�s hot topics, including cellulosic ethanol, E85, corn ethanol, food versus fuel, ethanol�s carbon footprint, E10, E15, and mid-range ethanol blends.
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