US Ethanol Plants Dropping Like Flies

VeraSun Energy Corporation, the second largest US ethanol producer has idled three plants with a collective production capacity of 330 million gallons pa.

The plants at Bloomingburg, Ohio; Albion, Nebraska; and Linden, Indiana were idled in late December after corn prices rose and end-product prices stagnated with crude oil at $40/barrel. The company said that there is no estimate on when plants would resume operations.

Pacific Ethanol Inc. announced last week that it was suspending output at its plant in Madera, California. On Jan. 7, Aventine Renewable Holdings Inc. said it had halted construction of its refinery in Aurora, Nebraska. In December AltraBiofuels Inc shut production at its plants in Cloverdale, Indiana, and Coshocton, Ohio.

This is yet another indication of how frail the US ethanol industry is, with the cost of production outstripping selling prices, even with the government's 45c/gallon tax-break that ethanol producers enjoy.

Lately the industry, through the Renewable Fuels Association (RFA), pleaded for a bailout worth a billion dollars in order to sustain current projects. Furthermore, RFA suggested that the forthcoming Obama-administration should come up with a $50 billion federal loan guarantee programme to attract more investment in the ethanol industry.

VeraSun filed for chapter 11 bankruptcy protection at the end of October, and has subsequently incurred the wrath of US farmers by defaulting on corn purchased at substantially higher prices than the current market.