Agriculture Department to help suffering ethanol suppliers
By David Hannon -- Purchasing, 3/12/2009 2:00:00 AM
While suppliers in a variety of markets struggle, ethanol producers have perhaps been harder hit than most—hit by volatile corn prices wreaking havoc on balance sheets, hit by declining ethanol and gasoline prices, hit by a massive slide in demand, all happening amid record-tight credit markets.
The latest victim was Wisconsin-based ethanol producer Renew Energy, which filed for bankruptcy in February after a bank refused to renew its operating loan. Archer Daniels Midland Co., the third-largest U.S. ethanol producer, estimates that 21% of U.S. ethanol production capacity has been idled amid the economic recession.
"While we did foresee the overbuilding of some supply a while ago, we did not foresee the depth of this current economic crisis or the decline in gasoline demand," said ADM CEO Patricia Woertz on a conference call with analysts.
But help may be on the way for struggling ethanol suppliers from the Department of Agriculture, which said in late January it plans to promote ethanol production best practices to ethanol producers to help them discover the most efficient methods for producing ethanol.
At a press conference in January, newly appointed Agriculture Secretary Tom Vilsack said "it's fairly clear, ethanol producers are under a particular strain as is the case with most elements of our economy. There will be a premium on ethanol producers who are efficient and effective in the management of the facilities. USDA has a role I believe in helping to develop and promote best practices that will increase and enhance management efficiencies."
The USDA released $25 million in funding for biomass research in January as well.
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