POET is the world’s largest ethanol producer, annually producing 1.7 billion gallons of clean-burning fuel.
But it was not always so.
While many companies tout their “humble roots,” POET’s beginning, on the Broin family farm near Wanamingo, Minn. must count among the most humble. It was there that the Broins cobbled together their first small ethanol distillery and, unbeknownst to them at the time, spawned the company that would be the leader in the alternative fuel industry shortly after the turn of the century.
South Dakota is home to POET’s corporate headquarters, the hub of a network of 27 plants spread across the Midwest. A mere 30 miles away sits the original farm-scale plant built from auctioned off scraps and tanks. It has a new home and is run by a new family, although still with ties to POET. And it’s quietly producing ethanol as it first did almost three decades ago.
Trash to treasure
In the early 1980s, the Broin family made a decision: Perfectly good farmland was going to waste, and corn prices were below production costs. As corn prices were falling, they sought another way to boost income while using their surplus corn. They decided to build their own small ethanol plant.
The move was a risk. All over the country, farmers were losing everything they had taking the ethanol gamble. The farm-scale ethanol plant model was proving to be a failure.
“I tell you the blessing for my family was we were able to learn from other’s mistakes,” POET CEO Jeff Broin said. “And secondly, we knew how to find and retrofit process equipment at an extremely low cost.
“My father and my brother Rob laid out, designed and built a plant with some outside engineering help, but mostly they did it themselves from scratch. The plant was built almost entirely of used equipment.”
Lowell Broin and his oldest son Rob were the ones who started amassing the equipment needed to build the plant. Jeff Broin remembers at age 10 going to pick up fermentation tanks from a glue factory in St. Paul.
“They actually got the tanks for a very low cost as they were tearing them down. We hauled them back to the farm on our own truck,” he said.
It took a few years, but by the mid ‘80s, as corn prices hit rock bottom, a 125,000-gallon per year ethanol plant began operating on the farm. Things went well in the early years, and they quickly doubled its capacity. It became a point of pride for the family.
“My mom painted everything; it was a really neat looking plant,” Jeff Broin said.
Tinkering, trouble-shooting and renovating were the norm. The Broins slowly learned more and more about how to operate a successful operation.
“Sometimes we shut the plant down for lack of market for the byproduct, actually,” Jeff Broin said. “But it would run three, four, five days a week, every week, sometimes even more.”
Upping the stakes
Success inspired them to think bigger.
In 1987, just as they were expanding the farm plant, the family was able to purchase the whole Scotland, SD plant for five cents on the dollar at a bankruptcy auction.
“We learned enough from that plant to have the intuition to take the next step,” Jeff Broin said.
Even at such a great price, the purchase required the Broin family to mortgage the family farm in order to finance it. The Scotland, S.D. plant is officially where Broin Enterprises – which later became part of POET – was born.
Jeff Broin, after a brief stint as an ag banker and at the age of 22, became the general manager of a plant with the capacity to produce 1 million gallons per year. Rob Broin left the family farm shortly after to work alongside his brother Jeff at Broin Enterprises as vice president of design and construction. Another brother, Todd, joined a few years later to manage plant operations.
At about this time, Lowell Broin was looking to reduce his workload on the farm. With his sons running the Scotland plant, he had more work overseeing the farm operations on top of the plant duties. So the Broin family looked for a buyer for the farm-scale plant.
A new family takes over
As general manager of the plant, Jeff Broin talked to a lot of farmers. During a conversation with the Geraets family about their farm and feed lot, Jeff mentioned that they were looking to sell their farm-scale operation.
“More or less, the wheels got turning, and we took a trip out to look at the plant,” said Jim Geraets, who was an engineering major at the time. Today he doesn’t work on the family farm or ethanol plant. He is the Sr. Alternative Energy Engineer at POET.
The Geraets looked over the farm-scale plant and decided it made sense for their farm.
“It was interesting to us to be able to make something out of corn and have the by-product we could use on the farm and also sell,” said David Geraets, the current owner/operator of the plant. “At the time, [ethanol] was 60 to 70 cents a gallon, not three dollars like it is now. Of course corn was relatively lower too.”
The farm was a great fit for an ethanol plant, and the Broins were just looking to liquidate theirs because of labor issues. It was a perfect set-up.
“It was a great opportunity for the Geraets to purchase a very low capital cost plant and put it in a situation where they had the corn to feed it and also had a ready-made market for the distillers products coming off it,” Jeff Broin said. “It was truly a unique match for both parties.”
The deal involved moving the plant to the Geraets recently purchased farm, JPJ Enterprises, Inc. in rural Minnehaha County north of Humboldt, S.D. Broin & Associates, the Broin family’s design and construction company, had just been launched, and they took on the contract to relocate the plant.
“We moved the whole thing over to their farm and set it up. We made a couple of modifications when we did the inputs, including new automation, that made it run by itself,” Jeff Broin said.
Modernization at farm-scale
The little ethanol plant continued operating with a new location and new owners, but it was still a family operation. When it started up in the early 1990s, the Geraets were making about 600 gallons per day.
“We originally started out producing only 180-proof ethanol – which needed further refinement,” Jim Geraets said. “That was done down at the Scotland, S.D. facility. We actually shipped it down there as part of the original deal when we purchased the plant.”
That changed in 1996 when they decided to install molecular sieves in order to produce 200-proof ethanol on the farm. Broin & Associates wanted to help the little plant survive and proceeded to help build those sieves at cost.
“We did it really cheap,” Jeff Broin said. “We got some used parts and just put together a low-cost system. And that’s it; they have been running ever since.”
From that time on, the Geraets were able to market directly to blenders.
A full-day job
If you drove by the Geraets farm today, you’d instantly notice the feedlot and fields of corn, soybeans and alfalfa. But you would never know that they produce ethanol in a plant tucked inside a 40×60-foot nondescript building.
“It looks like a regular machine shed,” David Geraets said. “There’s some tanks and some other things that people who realize what a plant is, well they might know it.”
Running the plant requires one devoted full-time employee, but they can do other things around the farm as well. David Geraets said it takes as much as 12 hours per day.
“The little plant has all the same processes,” he said. “The same steps need to occur just like with the big commercial plants. It’s just things are done a bit differently.”
Jim Geraets said the difficult part is that you don’t work on it for a block of
time. You have to come back to it constantly.
“You had to be awake for about 16 hours,” he said. “It’s a here-and-there-all-day-long type of thing.
The circle of ethanol production
The ethanol plant works because almost everything stays within their own farm, David Geraets said.
“You take your land base right behind the trees,” he said. “You’re growing corn, and you’re bringing the corn in and you’re making ethanol. You are making feed and the feed goes to the cattle. The cattle produce manure. The manure goes back on the fields and you grow corn again – a closed-loop system.
“The ethanol is utilized by your farm. Then some goes to a local service station. He’s selling it to the local people that I do business with, so I guess in turn, they are doing business with me and that creates a nice partnership.”
The other benefit is less direct, but no less important.
“It feels good to know that we are trying to keep some foreign oil out of the country,” he said.
When it comes to selling the ethanol, they are in competition with the big plants. But the Geraets have a nice set-up with Volan Oil.
“We use quite a fair amount of diesel fuel here on the farm,” David Geraets said. “He’s bringing out product for us, and then he goes back with a load of ethanol. It’s a win-win for me and him.”
Just like when the Broin family owned and operated the plant, David Geraets only runs the plant when the economic conditions are right. Therefore, it’s not running all the time.
Input costs are a major determining factor in that: mainly natural gas and corn.
“This last summer, corn was quite high, and we had a situation where our power provider had to switch us up to high voltage,” David Geraets said. “We actually ended up selling corn in those months that we were down for the power upgrade.
“We are just getting started up again this fall since the corn prices have settled off and the ethanol hasn’t settled off as much. It’s profitable again. Plus this time of year we start putting in a lot more cattle, so we can utilize the distillers real easily.”
Unique circumstances breed success
Neither Jeff Broin nor David Geraets recommend starting up a farm-scale ethanol plant today.
“A 250,000 gallon plant new today would probably cost you $1.5 million,” Jeff Broin said.
Besides that, there are many laws and regulations an operator has to follow, and it gets harder and harder to stay on top of it all, David Geraets said.
“Most people don’t understand what it takes to do quarterly reports,” he said. “And every day the EPA is adding another report it seems like. I get to do just as many reports as POET does. There’s a lot of red tape that does really affect our scale of plant.”
The Geraets situation was unique, Jeff Broin said.
“We had a plant that we wanted to move for a low cost and they had the perfect spot to put it in – in their feedlot,” he said. “We slid it into the slot and it worked out fantastic.”
Family, work and passion
David Geraets hopes the family ethanol plant will have many years ahead of it. He hopes his children will continue to run it “as long as there are cattle to feed and they are growing corn.”
And while the plant on the Geraets’ farm may not have a plaque attached to it explaining its significance in history, it has played an important role in launching the largest ethanol producer in the world.
More than the machinery and mechanics, Jeff Broin said the success of POET is due to something you could never get pennies on the dollar for: people.
“You need to have the right people involved,” he said.
“The right people and the right culture are critical to success.”
Whether it’s 250,000 gallons or 100 million gallons, it’s people putting in hard work, paying attention to detail and appreciating what renewable fuel can do that makes these operations a success.
