Ethanol producers are feeling the crunch that was only a matter of time . . . the profit does not beat the yield. With one acre of land producing about 7,110 pounds of corn, that works out to being able to process 328 gallons of ethanol. Breaking it down further, it takes about 26.1 pounds of corn to make just one gallon of ethanol. You won’t hear much about it from the main news media, but ethanol manufacturers/producers are dropping along the wayside . . . they simply cannot make any money doing what they are doing. Huh? Who saw that coming?
Nearly every publicly traded ethanol company has filed for bankruptcy over the last year. These include VeraSun Energy, Aventine Renewable Energy Holdings and Pacific Ethanol, just to name a few. Ethanol producers are unable to survive. Large subsidies from Federal and State governments could help, but is still no guarantee. It was a huge undertaking across the country to move to the 10% ethanol/gas mixture, even when the “no-profit” talk was being discussed. Now, we see many ethanol producers filing bankruptcy.
What is also ironic, is the fact that some of the ethanol producers going belly up, were actually sold to oil companies . . . imagine that.
© 2009, AskTheTrucker. All rights reserved.
: bankruptcy, corn, ethanol, ethanol gas, filing, manufacturers, producers, profit
AskTheTrucker
Actually, ethanol production every month this year has surpassed last year’s production level and many companies have remained profitable. Certainly some companies got too big too fast and did not have solid business plans for the run-up and subsequent fall in corn and oil prices last year. Yet overall, the ethanol industry is doing quite well.
For every bushel of corn that weighs 56 pounds and is run through an ethanol plant, 2.8 gallons of ethanol and 17.5 pounds of distillers grains (a livestock feed) are produced.
Mike’s right. Do the math. You get about 1/3 by weight (more by protein) back into the feed industry. So if you’re going by weight (which is the most conservative), you can only count 2/3 of that bushel (37 pounds) as being “lost” to ethanol.
Then the fact that you have the wrong conversion rate (where did you get that number?), changes it even more. 2.8 gallons from that 37 (not 56) pounds = 13 pounds of corn.
So you’ve essentially DOUBLED the real number in your “analysis.” This kind of journalism, as opposed to facts, is what’s killing biofuels.
Journalism?
Wow, I just looked at your yield data, too. 7,110 pounds of corn per acre? It’s been a decade since the national average was that low. That works out to 127 bushels per acre. We were at 160 in ’04, above 150 for the next three years, and we’ll be close to 160 again this year.
But just going with 150 to be conservative and assume it’s a down year, that would come to 8,400 pounds of corn per acre.
Who’s paying you to blog? Exxon?
Wow. Sorry, but wow. Underestimating corn yields by 20 percent. Wow.
These figures are from a research done by Cornell University. Looking back at the study I did notice that it was performed about a year ago.
According to the research from Cornell: “you need about 140 gallons (530 liters) of fossil fuel to plant, grow and harvest an acre of corn. So, even before the corn is converted to ethanol, you’re spending about $1.05 per gallon. The energy economics get worse at the processing plants, where the grain is crushed and fermented. The corn has to be processed with various enzymes; yeast is added to the mixture to ferment it and make alcohol; the alcohol is then distilled to fuel-grade ethanol that is 85- to 95-percent pure. To produce ethanol that can be used as fuel, it also has to be denatured with a small amount of gasoline. The final cost of the fuel-grade ethanol is about $1.74 per gallon. (Of course, a lot of variables go into that number”.)
Again, I believe this was done about a year ago . . .
There is some assumption going on here through these various posts. It appears that you are assuming that I am against ethanol, biofuels and other alternative energies . . . I am not – I’m all for it . . . secondly, you assumed that these were “my numbers” . . . they are not . . . and thirdly, you assume that this post was all about how many acres it takes to make a little ethanol . . . it was not.
VeraSun Energy Corp., the second- largest U.S. ethanol producer, idled three distilleries as demand fell and prices fail to cover the cost of production.
Pacific Ethanol Inc., suspended output at its plant in Madera, California.
Aventine Renewable Holdings Inc., had to halt construction of its refinery in Aurora, Nebraska.
AltraBiofuels Inc., shut production at its plants in Cloverdale, Indiana, and Coshocton, Ohio.
Biofuel Energy Corp., has lost 96 percent since its stock began trading in June 2007.
Aventine’s shares have plunged 99 percent since June 2006.
I could go on, but I won’t. We have a mandated demand for ethanol, which means there will continue to be an ethanol industry. What we are seeing, I believe, is the downfall of many, not all, producers. At the start, it was too easy to “get into the business.” Many jumped on board and soon discovered that the cost of production surpassed the profit.
Ethanol will remain around due to a mandated demand. Non-integrated producers will go out of business, and the integrated producers will stick around.
I am all for finding alternative fuels and energies . . . perhaps my post was taken wrong. It was just a small, tiny news post about how many ethanol producers are going bankrupt due to the inability to make a profit . . . that’s it . . . nothing more, nothing less.
1. Everyone went broke last year (except oil companies). Should we stop building houses since so many construction companies have gone under? It’s bad to blame the economy for other businesses problems and then say, “But with ethanol, it’s totally different.”
2. That data is waaaaayyyyy more than one year old. I know agriculture, and I know that study. It takes the worst possible numbers (as I outlined, just look at corn yields) and extrapolates it for all of agriculture and then the ethanol industry. Tip: Don’t use that Cornell professor. If you’re looking for negative ethanol studies there are less biased ones, at least.
3. “At the start, it was too easy to “get into the business.” Many jumped on board and soon discovered that the cost of production surpassed the profit.”
I agree with the first part of your post, but not the second. I think a lot of people who didn’t know what they were doing got into it and made money despite themselves. But it’s still profitable, as is evidenced by the fact that (as you note) oil companies are now making it and making money doing it.
Yea, I believe you’re right. The report goes back further than one year … I could not find an exact date on it, but believe it was 2006. Also, I do believe the Professor was against ethanol from the very beginning . . . not very unbiased at all, however, once again, the exact amount of corn it takes to make one gallon of ethanol was not the point of the post, but thanks for the comment.
Now you made me feel bad by being civil. I learned my lesson. Thank you.
LOL – Well, I’ll tell you one thing … next time I make a post about ethanol I’m going to do a much deeper research!