The persistent drought is taking a toll on producers of ethanol, with corn becoming so scarce that nearly two dozen ethanol plants — though none in Iowa — have been forced to halt production.
Twenty of the nation’s 211 ethanol plants have ceased production over the past year, including five in January, according to data from the Renewable Fuels Association, an ethanol industry trade group.
Most remain open, with workers performing maintenance-type tasks. But ethanol production won’t likely resume until after 2013 corn is harvested in late August or September.
Industry experts don’t expect a shortage — millions of barrels are stockpiled and the remaining 191 plants are producing. Still, there is growing concern about what happens if the drought lingers through another corn-growing season.
“There’s a lot of anxiety in the industry right now about the drought and a lot of folks watching the weather and hoping and praying this drought is going to break,” said Geoff Cooper, vice president for research and analysis for the Renewable Fuels Association.
“If we get back to a normal pattern and normal corn crop, then I think the industry is in good shape,” Cooper said. “But if this drought persists and it has the same effect on this coming corn crop, then we’ve got a problem.”
At Archer Daniels Midland, which has facilities in Cedar Rapids, has reduced production at two of its dry mills after negative ethanol margins in the second quarter of the fiscal year.
During an earnings conference call last week, Chief Operating Officer Juan Luciano said the company is not having difficulty finding corn for its ethanol plants.
“This was a tough market, but we can do better,” Luciano said in the call with analysts. “We have taken an even more aggressive look at all the aspects of our ethanol business operations, challenging every part.
“As a result of this, we have implemented a set of actions across the business that should improve our results going forward. This includes, among other changes, our decision to reduce production at some of our dry mills.”
America’s ethanol industry has taken off in the past decade. Plants in 28 states produce more than 13 billion gallons of ethanol each year, the association’s Cooper said. By comparison, in 2002, the industry produced 2.1 billion gallons.
Today, roughly 10 percent of the U.S. gasoline supply is made up of the biofuel.
Roughly 95 percent of U.S. ethanol is made from corn. The National Corn Growers Association estimates that 39 percent of the U.S. corn crop is used in ethanol production.
Ethanol plants idled since drought began; None in Iowa
Many U.S. ethanol plants have halted production over the past year, mostly because the drought has made it difficult to get locally produced corn. Most plan to restart, but it may not be until the 2013 corn crop is harvested in September.
Below is a list of idled plants and the month they ceased operation:
Midwest Renewable Energy LLC in Sutherland, February 2012.
NEDAK Ethanol, in Atkinson, June.
Valero-Albion in Albion, June.
Aventine in Aurora-East, September.
Abengoa in York, January.
Abengoa in Ravenna, January.
Valero in North Linden, June.
New Energy Corp. in South Bend, November.
Central Minnesota Ethanol Co-op in Little Falls, August.
Biofuel Energy in Fairmont, September.
ADM in Wallhalla, March.
Pinal Energy in Maricopa, July.
East Kansas Agri-Energy in Garnett, August.
Aventine-dry mill in Pekin, September.
Southwest Georgia Ethanol in Camilla, October.
Bunge-Ergon in Vicksburg, November.
Valero in Bloomingburg, December.
POET in Macon, January.
White Energy in Plainview, January.
CALIFORNIAAemetis in Keyes, January.