IFB Ethanol Blog

Study Finds Ethanol Plants Don't Change Farmland Use

A study conducted by the University of Illinois at Chicago’s Energy Resources Center revealed that today’s ethanol plants do not change farmland use in either total acreage farmed or crops raised.

The results of the study challenge an often stated, but unproven theory, that the production of ethanol involves conversion of unused farmland to produce corn as well as an increased percentage of corn acres planted.

The study was commissioned by the Illinois Corn Growers Association (ICGA). “This is the most thorough and far-reaching study on land use impact done to date,” said Rod Weinzierl, executive director of ICGA. “It demonstrates that the often cited link between new ethanol plants and the conversion of non-agricultural land to corn is highly questionable. Corn ethanol is not a central driver in the conversion of non-corn farmland to corn production.”

On another front, the Renewable Fuels Association released a report on the outlook for the ethanol industry for 2009. That report states, “The perfect storm of events in 2008, while temporarily disruptive, is going to lead to a new and more robust American ethanol industry in 2009 and beyond. The challenges faced and currently being addressed by this industry will make it stronger and more successful far into the future.

Aventine CFO Resigns

Aventine Renewable Energy Holdings, Inc. this week announced that its Chief Financial Officer, Ajay Sabherwal, has resigned, with regrets, to pursue another opportunity.

Yahoo Finance

ADM Shopping for Acquisitions, CFO says

Archer Daniels Midland Co. may take advantage of the economic downturn to buy heavily discounted assets, Chief Financial Officer Steve Mills said Tuesday.

Potential deals could bring ADM into new business areas, like ocean-shipping.

"We believe that the current economic downturn may provide us with opportunities to grow our global footprint in an economic way," he said, addressing the annual conference of the Consumer Analyst Group of New York, in Boca Raton, Fla.

ADM, a large user of ocean freight, has opted not to own its own fleet of ocean-faring ships in the past. The company is analyzing the possible purchase of a small fleet, Mills said.

ADM also has the opportunity to buy assets in its established businesses at a fraction of their full value, Mills said. He noted that many U.S. corn-based ethanol plants are currently distressed, but said ADM sees long-term value in producing the fuel.

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New Syngenta Corn Concerns Food Processors

A new gene-altered corn developed by Syngenta AG requires less energy and water to turn into ethanol, which theoretically could produce more ethanol per bushel, but food companies are concerned because the variety converts its own starch into sugar.

The grain is engineered to contain a special enzyme that turns cornstarch into the sugar that’s used to make ethanol. Syngenta says it will take less heat and water to make a gallon of ethanol using the biotech corn. Government officials say the corn is safe for human consumption. But companies that turn cornstarch into food ingredients aren’t so keen on corn that converts its own starch into sugar.

Syngenta is pledging to ensure that the corn is grown and stored separate from other types of corn and sold only to ethanol plants. But the food processors fear the Syngenta corn could still get into their grain supplies inadvertently.

Food companies such as General Mills, ConAgra and Archer Daniels Midland are asking USDA to delay approving the Syngenta corn.

NYT: Ethanol Struggles

Business

Ethanol, Just Recently a Savior, Is Struggling

By CLIFFORD KRAUSS

Published: February 12, 2009

As oil and gasoline prices plunge and the economy slumps, the ethanol industry has seen its fortunes decline rapidly.

 

http://www.nytimes.com/2009/02/12/business/12ethanol.html?partner=permalink&exprod=permalink

 

Business

Green Inc.: Senator: Ailing Ethanol Industry Needs Help

By Clifford Krauss

Published: February 12, 2009

Jeff Bingaman, the powerful chairman of the Senate Energy and Natural Resources Committee and a New Mexico Democrat, says Congress may need to help the ethanol industry.

 

http://greeninc.blogs.nytimes.com/2009/02/12/senator-says-ailing-ethanol-industry-needs-help/

Pekin Ethanol Plant Shutting Down

MGP Ingredients Inc. has announced plans to leave the ethanol business and will temporarily shut down distillery operations at a plant in Pekin, laying off 65 workers.

Those temporary layoffs will take effect this week, involving 45 union employees and 20 non-union employees at the Pekin site.

Citing declining market conditions for ethanol, the Atchison, Kan.-based company will cease ethanol production at the Pekin plant completely, said spokesman Steve Pickman. The Pekin plant produced 90 million gallons of ethanol a year.

The company plans to temporarily discontinue food-grade alcohol production in Pekin for 90 days.

GMA and Livestock Groups Want Ethanol Blend Capped

The Grocery Manufacturers and several food and livestock groups have written EPA Administrator Lisa Jackson and asked her not to boost the 10% ethanol blend level in gasoline.  RFD Radio Washington correspondent Matt Kaye reports on the ethanol industry's reaction.

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Economist: No Ethanol Profits for '09 in Iowa

Ethanol's profitability in 2008 hit a low for at least the last four years, according to Iowa State University Extension economist Don Hofstrand.

In his monthly tally of ethanol profitability, Hofstrand reports the average ethanol plant made zero profit in December after taking a profit of 9 cents per gallon in November.

For all of 2008, ethanol plants averaged a profit of 17 cents per gallon, down from 37 cents in 2007 in what will go down as the industry's banner year of 2006. Hofstrand calculated profitability by factoring in costs of corn, distillers' grain, natural gas and typical fixed and variable costs to operate an ethanol plant.

A big reason for the drop was the fall in the price of ethanol from an average of $2.64 per gallon in July to an average of $1.49 in December. That negated a corresponding drop in the price of corn that otherwise would have given ethanol producers some profitable headroom.

For 2009, Hofstrand isn't encouraging.

"While we are not projecting the cost of operating the ethanol facility in 2009 and beyond, higher corn production costs during this period will almost certainly significantly increase the cost of producing ethanol," he writes.

ADM Earnings up 24%

Archer Daniels Midland Co. said on Tuesday that 2.7 billion gallons of U.S. ethanol production capacity has been shut down due to weak demand and poor margins.

Ethanol plants with a production capacity of 10.2 billion gallons per year are currently operating, down from 12.9 billion, said John Rice, executive vice president, on a conference call with analysts.

Meanwhile, ADM announced its latest earnings report easily beat Wall Street expectations with quarterly profits up by 24%.  The Decatur-based firm reported a net profit of $585 million, or 91 cents/share, for its fiscal second quarter that ended Dec. 31.

VeraSun's recent bankruptcy has left ADM and privately-held POET as the two largest ethanol companies in the U.S.  POET is still No. 1 but ADM is expected to overtake POET as the largest U.S. ethanol producers when two new plants come online in 2010.