Manufacturing News
TECH FLASH

The case against corn ethanol

As more ethanol producers close, an economist asks if corn ethanol mandates make sense.

March 12, 2013
/ Print / Reprints /
ShareMore
/ Text Size+

The case against corn ethanol

In 2012, 20 ethanol producers shut down as drought and market competition made it nearly impossible for small, less efficient ethanol producers to maintain profitability.  Wallace Tyner of Purdue University’s Agricultural Economics department told Living on Earth Host Steve Curwood that’s because ethanol producers are hitting a “blend wall.”

That wall results from the disparity between the 13.3 billion gallons of ethanol used annually in the US and the 14.9 billion gallons the industry has the ability to produce. Those 13.3 billion gallons have been incorporated into gasoline by federal mandate at 10 percent by volume, and although EPA has approved 15 percent ethanol fuel for cars manufactured after 2001, only a fraction of gas stations have changed out their pumps.

Last year’s drought conditions also caused problems for ethanol producers. Tyner says that because ethanol pricing is pegged to corn rather than gasoline, drought caused the cost of corn production for both food and ethanol to rise significantly. And since that ethanol pricing is based on a break-even basis with corn, only the most efficient producers can turn a profit.

High levels of biofuel production have coincided with increased demand for meat in developing countries, combining to contribute to increased corn prices. Tyner says 40 percent of corn produced in the US goes into ethanol plants, although about a third of that ends up being fed to animals as distiller’s grain. The net 27 percent of corn going to ethanol puts the US comfortably in the global ethanol production driver’s seat.

Between high production and competition, Tyner says, “it is really tough to make money in ethanol today.” With ethanol prices now linked to corn, the same could be said for traditional grain farmers as well.

Did you enjoy this article? Click here to subscribe to Food Engineering Magazine.

Recent Articles by Shane O'Halloran

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

Fabulous Food Plant: Paramount Citrus

Learn more about this fabulous food plant in Food Engineering's article, found here.

Podcasts

Burns & McDonnell project manager RJ Hope and senior project engineer Justin Hamilton discuss the distinctions between Food Safety and Food Defense as well as the implications for food manufacturers of the Food Safety Modernization Act.
More Podcasts

What was your favorite part of FA&M 2014?

View Results Poll Archive

THE MAGAZINE

Food Engineering Magazine

Food engineering magazine 2014 april cover

2014 April

Catch a preview of the Powder and Bulk Show in this April 2014 edition of Food Engineering. Also, be sure to check out a coffee stick making a real stir and a major advancement in the the pet food industry.
Table Of Contents Subscribe

THE FOOD ENGINEERING STORE

Food-Authentication-Flyer-(.gif
Food Authentication Using Bioorganic Molecules

This text provides critical tools and data needed to augment routine food analysis and enhance food safety by aiding in the detection of counterfeit, and potentially deleterious, foods.

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Food Master

Food Master Cover 2014Food Master 2014 is now available!

 

Where the buying process begins in the food and beverage manufacturing market. 

Visit www.foodmaster.com to learn more.

STAY CONNECTED

FE recent tweets

facebook_40.pngtwitter_40px.pngyoutube_40px.pnglinkedin_40px.png