Shakeout Reshaping Ethanol Industry

A still-emerging ethanol industry that has already pushed many no-tillers into continuous corn — and which could eventually lead them to new biomass crops or even selling crop residue — appears to be in an early shakeout period.

The recent announcement of cancelled plans for an ethanol production plant with a capacity of 100 million gallons per year in Akron, Iowa, is the latest indication of a shakeout. The cancellation is reportedly tied to a downturn in the economics of the ethanol industry. The Akron Riverview Corn Processors LLC announced that it stopped the building project because of market conditions and would reconsider the development in the future only “if it deems it appropriate and advantageous.”

Ethanol producers are finding less incentive for new plants since ethanol futures prices began falling late last winter, on top of corn prices that have been higher than average over the same period. That represents a decrease in potential revenue while production costs for raw materials remains high.

In recent months, plans for other ethanol plants around the country also have been dropped or appear to have stagnated. These include:

  • E85 Inc., based in Seattle, said it would not build two planned 100-million-gallon plants in New Mexico and Oregon.

  • The California-based American Ethanol Inc. had not started construction of a 110-million-gallon plant in Sutton, Neb., 10 months after it had broken ground for the project.

  • The South Dakota-based Glacial Lakes Energy announced it was delaying construction of a 60-million-gallon plant in Meckling, S.D.



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