I had to look back at recent posts to make sure I had not already done this story, since I have written about so many new plants lately. This one was actually announced November 9, and it’s a significant one because it would be the largest in the country and would make Cargill the second largest ethanol producer in the country. Cargill is planning to build a second plant in Blair, NE that would produce 110 million gallons of ethanol per year. Currently, the largest plant in the country is Aventine Renewable Energy’s plant in Pekin, IL at 100 million – at least two other 100 mmgy plants are in the works, in Texas and Missouri. Aventine is currently the country’s second largest producer, but a far second from leader Archer-Daniels Midland. ADM produced over a billion gallons of ethanol last year at seven plants in the midwest. Cargill’s new plant would raise their total annual U.S. production capacity to 230 million gallons.
The already huge CHS, Inc. got bigger this week as it acquired 28 percent ownership in U.S. BioEnergy Corporation, an ethanol production and marketing firm.
CHS, a diversified energy, grains, and foods company, reported over $221 million in earnings last year and now plans to dive right in to the ethanol production arena, according to John Johnson, CHS president and chief executive officer. “By working with an established company, CHS becomes actively involved in the renewable fuels manufacturing arena more quickly and on a broader basis than it could have on its own.” CHS has sold ethanol-blended fuels for more than 25 years and currently is one of the nation’s largest suppliers of blended fuel products at 500 million gallons annually, distributed through 64 terminals. CHS is the conglomerate formed when Cenex and Harvest States Cooperatives merged in 1998. US BioEnergy is a Brookings, S.D. based company that currently has two ethanol plants under construction, US Bio Albert City, a 100-million gallons/year plant in Iowa and US Bio Superior Corn, a 45-mgy plant near Lake Odessa, Mich. In addition, US Bio Janesville, a 100 mgy plant in Minnesota, is under development and other projects are being considered. In addition, US BioEnergy’s subsidiary UBE, provides ethanol and dried distiller grains marketing and/or management services for 11 operating plants and six currently under construction.
A Florida-based company is importing biodiesel from Ecuador, but some domestic producers are not very happy about it. EarthFirst Americas, Inc., announced the arrival of the first shipment of almost 268,000 gallons of biodiesel this month, which is believed to be the largest single shipment of biodiesel ever imported into the United States. This first shipment is being sold to diesel distributors and end users throughout Florida. The company is expecting to arrange importation of up to 45 million gallons during 2006, and another 100 million gallons of biodiesel in 2007. They are even holding a press conference tomorrow (Friday, November 18) in Tampa to talk about their plans.
While this is good news for increasing biodiesel demand, it kind of defeats the purpose of DOMESTIC fuels if we’re importing it! That’s the American Soybean Association’s point – especially if they get a tax break that was intended to stimulate domestic production. ASA President Bob Metz says they are “outraged” that the imports will be taking advantage of the new tax incentive for biodiesel sold in the United States. “Importing biodiesel will only subsidize foreign farmers and biodiesel producers with U.S. taxpayer dollars,” said Metz. “The Administration and Congress must act immediately to eliminate loopholes that allow foreign biodiesel from exploiting a key part of our national strategy for reducing our nation’s dependence on foreign sources of energy.” The loophole is an Internal Revenue Service decision to interpret the biodiesel tax incentive passed by Congress to allow biodiesel made from vegetable oils not specifically listed in the statute, including tropical oils such as palm oil, which are not produced in the United States.
You can listen to Bob Metz’ comments about the issue here.
USDA’s latest crop production forecast calls for a U.S. corn crop of 11-billion bushels this year. While that’s seven-percent below 2004, it’s still an increase of two-percent from October and is on track to be the second largest corn crop on record – despite many major production states having drought conditions during a critical point in the growing season this year. This month’s outlook for 2005/06 U.S. corn is for increased production, higher domestic consumption, larger stocks, and lower prices. The good news is that more corn is going into ethanol production, according to Gerald Bange, chairman of USDA’s World Outlook Board. “We’re now looking at an ethanol usage number of 1.575 billion bushels, an increase of 75 million bushels over our previous forecast…that would provide for the production of about another 200 million gallons of ethanol.” Bange says the total ethanol production estimate for 2005 is 4.25 billion gallons. Last year, U.S. ethanol production totaled 3.4 billion gallons from 1.22 billion bushels of corn.
A bill introduced in the U.S. Senate last week would require all U.S. marketed vehicles to be manufactured as Flexible Fuel Vehicles (FFVs) within ten years. The Fuel Security and Consumer Choice Act, introduced by U.S. Sens. Dick Lugar (R-IN), Tom Harkin (D-IA) and Barack Obama (D-IL), would mean that all cars sold in the United States after 2016 would be capable of running on both regular gasoline and E-85 renewable fuel.
In a release from his office, Lugar said, “Flexible Fuel Vehicles play an important role in increasing our use of renewable fuels and decreasing our dependence on foreign oil. America’s insatiable appetite for oil places our nation in a precarious situation of reliability on regions that have become increasingly hostile to us. This bill would complement the exciting advances in the energy bill that Congress passed earlier this year that more than doubled the production and use of domestic renewable fuels. Passage of this legislation would send an important signal to the market that renewable fuels, such as those produced in Indiana, will be fully embraced by our nation.”
Getting more E-85 fueling stations and more flex-fuel vehicles on the road are goals of the National Ethanol Vehicle Coalition, based in Jefferson City, the beautiful capitol city of Missouri. NEVC is a non-profit membership organization that serves as the nation’s primary advocacy group promoting the use of 85% ethanol as a form of alternative transportation fuel, according to their website. The organization was one of 98 companies, groups, and government agencies that had booths at the National Association of Farm Broadcaster’s “Trade Talk” where they were interviewed by about a hundred or so ag journalists from around the country. The lovely and talented Michelle Kautz, NEVC communications director, celebrated a milestone birthday (we won’t tell which one!) at Trade Talk doing interviews. I think I was the last interview for her of the day – click here to listen.
There are lots of organizations that are involved in some aspect of domestic fuels. I had the opportunity to talk with two of them this week in Kansas City at the National Association of Farm Broadcasters meeting. The first is the Renewable Fuels Association. According to their website, RFA was started in 1981 to be a voice for the ethanol industry “providing advocacy, authoritative analysis, and important industry data to its members, Congress, federal and state government agencies, strategic partners, the media and other opinion-leader audiences.” RFA lobbies on behalf of renewable fuels on the national level and was very involved in the drive for comprenensive energy legislation to help the industry. Click here to listen to my interview RFA President Bob Dinneen at NAFB. Bob did many interviews on Thursday in Kansas City with farm broadcasters from all over the country. RFA recently announced a new feature for their website – archived audio and video clips! The “Video Archives” and “Audio Comments,” located under the Media Center menu, will provide video clips of important industry events as well as audio versions of the latest news from RFA. Both media formats may be downloaded for later viewing or use in news reports. That’s a great way to use the website to get information out to both the media and the general public!
It has been noted that ethanol production is changing the way grain is marketed… now someone is doing something about it. It’s called the Dynamic Pricing Platform (patent pending, according to the release) and the folks who are making it happen are Farms Technology, LLC, Overland Park, KS., and United Bio Energy (UBE), Wichita, KS. According to the press release:
The DPP gives producers the ability to create, manage and monitor target priced cash grain offers that are evaluated in real-time with every tick of the futures market. Growers no longer need to be by a phone to call their local buyer at the right time on the right day to get the best prices. In addition to target offers, a variety of online marketing tools are available around-the-clock. These include: average pricing contracts, futures fixed contracts, basis contracts along with historical cash pricing data, cash bid sheets, and local buyer commentaries.
Basically, DPP is an “on-line tool for cash grain sellers.
Ron Hansen, Vice President of United Bio Energy Management, Wichita, KS says, “UBE is committed to offering our ethanol plant partners innovative and efficient methods of conducting traditional business. After listening to our ethanol plant partners and their corn suppliers, we have chosen to offer the DPP technology to provide them with the ability to sell either by traditional means, or by this new and convenient way to sell grain. The DPP will help us service more customers in a cost-effective manner. Our suppliers can offer us their grain at the cash price they choose, and really put the power of the market to work for them online at anytime, day or night, when it’s most convenient.”
The first plant to use the system will be East Kansas Agri-Energy in Garnett, KS.
Australia is getting into the ethanol business. Dalby Bio-Refinery Limited has announced it will commence Stage One construction of an ethanol plant, worth $54 million, near Dalby during the first half of 2006.
Chris Harrison, Director of Dalby Bio-Refinery Limited, said the first stage of the project would produce 40 million litres of ethanol while the full project will have annual production of a minimum of 80 million litres. “We are constructing the plant in two stages, to allow our project to grow with the market,” he said. “We are using proven grain to ethanol technology from an industry leader in the US fuel ethanol industry, Delta-T Corporation of Williamsburg, Virginia.” It will be the first Dry Mill grain to ethanol plant constructed in Australia and the first plant built specifically for the production of ethanol for fuel since the Second World War. The refinery will produce ethanol from sorghum and wheat, but can also utilise other grains such as corn and barley.
On Monday, November 7, the farmer-leaders of southeast Missouri announced Bootheel Agri-Energy, a pioneering effort to build an innovative 100 million gallon, coal-fired ethanol plant. Near as I can tell, 100 million gallons a year is about the most any ethanol plant in the country produces, and it’s twice the capacity of any already operating or planned for Missouri. Missouri Corn Merchandising Council chairman Mike Geske, a farmer from the bootheel area, says they are very excited about the plans for an ethanol plant in that region. “There’s a lot of production down here – one of the largest corn production areas in the state. It was very much a gap in our ethanol production ability in the state of Missouri.” I interviewed Mike about the plans for this week’s Missouri Corn Growers CornTalk.