In the mid 1990s, a group of local farmers decided that Southeastern Minnesota should have a biorefinery to create ethanol from corn, which would provide them with a new avenue of selling their corn. With that in mind, they created Southeast Minnesota Ethanol, LLC, also known as SME, and purchased some land just outside of Preston. The next step was to find someone willing to build a plant there. They found Jeff Broin, who had been operating a biorefinery in Scotland, S. Dak., since 1988 and now owned other plants as well. He was willing to contract with SME to build an ethanol plant on the land that SME owned. Construction began, and the Pro-Corn Biorefinery opened and began operations in 1998.
Over the next 20 years, Pro-Corn grew and flourished. In 2007, Pro-Corn, along with all of the other ethanol plants owned by Broin, were re-branded under the POET Biorefining, LLC name. POET continued to manage the Preston plant while the approximately 200 shareholders of SME retained the majority of the shares.
Recently though, POET decided to look into opportunities to merge all 27 of the POET Biorefining, LLC plants. They presented the offer to the local shareholders of the SME, and a vote was taken during which a vast majority of the shareholders voted yes to the merge. This left the members of SME with several options. They could sell all or some of their shares or they could roll their shares over into the new entity. Most of them decided to roll their shares over. Chris Hanson, General Manager of POET Biorefining, LLC of Preston noted that the change was beneficial to the shareholders. “It changed what their shares represent,” he said. There are a total of 27 POET Biorefining, LLC plants across Minnesota, South Dakota, Iowa, Missouri, Michigan, Indiana, and Ohio. All of the plants merged into one entity, which meant that the shareholders of SME now would hold shares in all of the plants rather than just the one in Preston. “The shareholders own a piece of a larger pie,” Hanson said. “It’s good for them and good for business as well.” The merge also provided them with greater liquidity options should they decide to sell their shares at any time.
Hanson pointed out that, as the ethanol business relies on farming, it means that it can have up and down years just like what farmers experience. Some years, the plants do really well while others are not as profitable. Things can vary widely from year to year and from plant to plant. “Spreading that out among all plants mitigates that risk,” Hanson said.
The deal to merge was closed in November 2018 and SME dissolved at the same time, as it no longer had a purpose. The transition went smoothly with no noticeable changes to how the plant is run. “POET plant
management still manages the plant,” Hanson said. “From a managing perspective, it’s all the same people in the same positions as before.”
The merge will provide more opportunities for POET to grow. When each plant operated as a standalone entity, the options for growth were limited. Now that they have all merged into one, they can enter new markets that were not available to POET before. Hanson pointed out that the POET Biorefining, LLC plant in Preston has been able to increase its production every year for the last four years, and he expects that trend to continue in 2019 and 2020. “We have a team here who is really dedicated to keeping things growing and moving,” he said. “The bigger we are, the more corn we’re going to use and that helps the corn price for the farmers. The best thing that can happen in agriculture today, is that we create a larger market for biofuel in the US.” Hanson noted that President Trump has directed the EPA to lift the restrictions on E15 fuel, allowing for year-round E15 sales which could happen as soon as June of this year, a measure that was applauded by POET Biorefining, LLC.
Hanson noted that some of the benefits of using biofuel are that it’s better for the environment, more cost efficient for consumers, produced locally which benefits the US economy, and it burns cooler and cleaner in motor engines than the expensive blends do. “There’s lots of future potential for biofuels as E15 grows,” he said. “The market is growing and POET is in position to take advantage of that.”