Ethanol Producer : Outlook Good Despite Challenges

The Free Press

March 27, 2014

By Josh Moniz

WASECA — Despite numerous problems for the ethanol industry looming in the future, the CEO of two regional ethanol plants is optimistic that the industry is headed for a positive period.

Randall Doyal, CEO of Al-Corn Clean Fuel in Claremont and board chairman for Janesville ethanol plant's owner Guardian Energy, said Wednesday at the Waseca Farmer Forum that several positive factors were converging to help ethanol producers. He noted that corn prices were dropping while the yields from the crop were exploding in size.

He also noted that automobile manufacturers were starting to push for 25 to 30 percent blends of ethanol in U.S. fuel, which would help them better design vehicles that maximize ethanol instead of merely accommodating its presence. He said this will inevitably lead to a larger market for producers.

But he said that each shift in the ethanol market produced varied outcomes for plants on either end of growing industry. The fluctuating corn prices helped or hurt the Janesville plant and the Claremont plants in different ways.

He said the three year stint of record high corn prices, which included a Midwest drought for one of the years, forced small or weak ethanol plants to reduce, shutter or close. But small plants closing provided an opportunity for bigger or better-positioned ethanol plants, such as the resurrected Janesville plant.

He said the reduced corn prices help smaller or new plants prosper and grow the overall industry. However, he said that may cause overproduction, which can hurt plants across the board.

Doyal said he had foreseen the 2008 ethanol market collapse by recognizing the growing overproduction and making efforts to protect his plants, such as paying off the debt on the Claremont plant. He said he feels another market collapse will be inevitable.

A good deal of ethanol profitability around the country has been caused by plants having issues with getting their product to market. He said these transportation issues will eventually be cleared up, resulting in current production exceeding the market's demand.

Despite his predictions, he said he feels the cycles are a natural part of the industry growth that will eventual lead it to becoming more stable.

Similarly, he said he opposes the Environmental Protection Agency's proposal to reduce the federal Renewable Fuel Standard by 10 percent, or 1.4 billion gallons of the ethanol mixed into the U.S. gasoline supply.

He said the idea behind the EPA's proposal to reduce the requirement due to lower market demand had some merit, but it carried too large of a risk of creating a permanent cap on the RFS and scuttling all research efforts on other types of biofuels.

Doyal said he expects the EPA to ultimately reduce the RFS by less than 10 percent due to the volume of negative public comments about the proposal.

The EPA is scheduled to issue its final order sometime before the end of the summer.

Read the original story here : Ethanol Producer : Outlook Good Despite Challenges