CAYUGA, Ind. — Area farmers and leaders welcomed recently announced plans by Renewable Agricultural Energy Inc. (RAE) to build a $145 million ethanol plant near Cayuga, Ind.

The plant will process more than 36 million bushels of corn and produce 100 million gallons of ethanol per year. RAE officials already said they ultimately would like to expand the plant to produce at least 200 million gallons per year.

Most of the corn will come from farmers in Vermillion and surrounding counties, a region that has produced up to 125 million bushels annually in recent years.

“It will have a huge impact on local farmers,” said Ed Cole, executive director of Vermillion County Development Council (VCEDC). “We believe it should impact prices by five to 10 cents per bushel, once the plant is running.”

Cole said reactions from local farmers were “all positive.”

RAE, a Boulder, Colo.-based company, expects to start construction of the plant next year, pending regulatory approval and finalized agreements on state and local tax incentives. The company anticipates construction of the plant to take between 16 and 20 months, and hopes to produce ethanol by the end of 2008.

“We’re looking at distributing both within the region and potentially to East Coast markets,” said Todd Gander, RAE’s vice president, strategy and planning.

The plant will create approximately 45 jobs and bring a payroll of $1.5 million to Vermillion County, not including the construction phase.

RAE has been working with the Indiana Economic Development Corp. and the VCEDC since May to identify the site in Vermillion County, approximately 35 miles north of Terre Haute, Ind. and less than a half-mile west of State Road 63. A different company had previously shown interest in the site, so a lot of the preparatory work was already done, according to Cole.

“Some of the key factors were strong support from the local community, a good local corn supply and attractive markets,” said Gander.

Access to the railroad, a reliable natural gas supply and good infrastructure also played a part in the decision, Cole said.

Three area farmers have agreed to sell the acreage necessary to build the facility.

“We’ve had to work with landowners and that took some effort. These are family farms that they have held onto for a long time,” said Cole. “They felt comfortable doing it knowing it’s a good investment for the county.”

The Cayuga plant will be part of RAE’s strategy to bring online five ethanol plants with the combined annual capacity of at least 500 million gallons before the end of 2009. The first plant was announced in April and will be built in Gothenburg, Neb.

“Certainly time is money and we want to make sure we’re getting (the plants) online as quick as we can, without compromising safety and quality,” said Gander about the aggressive timeline.

“There is certainly good public policy support for ethanol right now, and we believe there will be a long term pressure on petroleum prices. Using renewables is timely.”