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Expanded processing of agricultural products in rural areas has been widely pursued as a strategy for rural economic development. By adding value to farm products before they leave the area, new processing plants can create new employment opportunities and generate economic spinoffs in rural areas that have experienced economic stagnation or decline as a result of long term trends of farm consolidation. In addition, farmer owned processing facilities provide a way for producers to integrate forward and capture potential profits from processing and marketing their products. Consequently, the expansion of agricultural processing in rural areas usually receives broad-based support from commodity groups, rural development interests, and state political leaders. In recent years, the most prevalent type of new agricultural processing ventures in the Midwest and Great Plains states has been corn ethanol plants. Like other types of agricultural processing, these biofuel ventures have generally received widespread support, and numerous studies have addressed their contributions to local or regional economies. However, while the methods employed have seemingly been quite similar, the findings have varied widely with the impacts attributed to ethanol development differing as much as ten-fold. The purpose of this paper is to (1) examine reasons why estimates of local or regional economic impacts of biofuel development may vary and (2) compare the economic impacts of corn-based ethanol production with those expected to be associated with cellulosic ethanol production.


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