Ethanol producers meet in Omaha during “incredibly challenging year” for industry
August 10th, 2012 by Ric Hanson
Facing one of their most difficult seasons in history, hundreds of people involved in the production of ethanol are meeting this week in Omaha. U-S Ag Secretary Tom Vilsack will be the keynote speaker today (Friday) at the American Coalition for Ethanol conference. Brian Jennings, the coalition’s executive vice president, says the worst drought to hit the region in decades is hurting farmers, consumers and everyone in between.“This is going to be an incredibly challenging year financially for ethanol producers,” Jennings says. “As corn prices continue to climb, many ethanol plants across the country have had to adjust output accordingly because corn is the greatest cost component of an ethanol production facility.”
Iowa is the nation’s number-one ethanol producer with more than 40 plants operating. While one of the conference sessions is called “Proud History, Bright Future,” Jennings says the future is uncertain for many of those producers in Iowa and nationwide.
“We know of some plants that are not operating what-so-ever today,” Jennings says. “We know of others that have cut production back by as much as 20 or 30%. The challenges are very real for these producers.” While there’s much anxiety over the drought’s impact on the corn crop, Jennings says waiving the Renewable Fuel Standard — which insures more ethanol is blended into gasoline — is not the way to go.
“It simply would not reduce corn prices,” he says. “It certainly won’t make it rain or make more feed available and the consequences of removing that would result in higher gas prices and more costs on the refiners who benefit handsomely today from the cheap octane that ethanol provides them.” As the corn plants have withered in fields across the region in the hot, dry weather, the corn supply has thinned while demand has gone up. Gasoline prices have risen more than 20-cents a gallon in the past month. “Ethanol prices have tended to track along with corn,” Jennings says. “You see some instances where ethanol prices are increasing in association with corn but you also see gas prices are rising along with that and corn prices are rising far greater than ethanol prices.” This is the coalition’s 25th annual conference, drawing ethanol producers and other industry officials from as far away as Arizona and Michigan. Learn more at “ethanol.org”