New Ethanol Plant Being Built

[Gary_C]

I doubt any investors will lose money on this one.

Ethanol plant to be built in Central Iowa

[Kansas]

Albenogea is doing the same thing in southwest Kansas. I wonder what the economics are of all the fuel to collect and haul that 300,000 tons in, the loss of all the organic matter and maybe some fertilizer value, compared to what the will get. Maybe someone can explain the economics of it to me, because just as a matter of practical fact, it just doesn't look feasible.

[beenthere]

I heard a radio ad yesterday promoting the ethanol in fuel to save on gas usage (supply).

It got me to wondering and calculating (in my head).

I get just under 17 mpg using 10% ethanol in the gas. I get 2 more mile to the gallon using straight gas (no ethanol). I figure that to be a 10% improvement, yet I only pay an additional $0.10 per gallon more for the straight gas (about 2.7% more on $3.70 per gallon price of mixed gas). So I am saving money by buying straight gas.

I briefly wondered if I was actually using more (or less) straight gas by buying with ethanol. Seems to be a wash to me, and not saving any gas supply by buying a mix with ethanol.

[Gary_C]

Ethanol was never touted as a gas saving additive. In the beginning Ethanol was added as an oxygenate and competed with MBTE, which was pushed by the oil companies as their additive. But when MBTE was found to turn up in drinking water, MBTE was banned in favor of Ethanol. The oil companies have been at war with Ethanol ever since. And even at the start of the automobile age ethanol was a strong competitor with gasoline. But John D Rockefeller won, some say by nefarious methods and Standard Oil was born.

What is overlooked today in this ethanol vs. crude oil debate is just where we would be today without the ethanol in our gas supply. I don't know how much crude oil that ethanol has displaced but for sure we would be far more in debt to oil producing nations and who knows what price we would be paying for our auto fuel.

And I am still amazed that a home grown product is so disparaged in this country. I know that corn producers never envisioned that corn based ethanol would be the final supply source for producing ethanol. But today progress and development in feed stocks would not be possible if it were not for the operating plants and the improvements in processes they have made.

[OneWithWood]

I don't think ethanol is disparaged, per se.  Many just think we need to be using a feed stock other than corn.  Cane or beet sugar makes more economic sense than corn and has been proven in Brazil to work very well.  Hopefully progress will be made utilizing cellulosic feed stocks like wood fibre and switch grass. 
An argument could be made that all the investment in corn based plants as slowed or deflected research dollars for other feed stocks. 

[Al_Smith]

That is basically where I'm at on the subject .

[Gary_C]

I don't think ethanol is disparaged, per se.  Many just think we need to be using a feed stock other than corn.  Cane or beet sugar makes more economic sense than corn and has been proven in Brazil to work very well. 

In this country, the sugar industry is heavily subsidized by the government because it's just not competitative with High Fructose Corn Syrup and the market for sugar has shrunk because of artifical sweeteners. Plus it is not historically grown to the extent corn is grown. So at least in this country, cane or beet sugar does not make more economic sense and is not available in quantities that corn is available. It would just have to displace corn and soybeans as a field crop and what sense would that make.

As far as research and development is concerned, all the process improvements in making ethanol have been made by the operating plants to improve their efficiency and bottom line. That is a normal process. And in no way has that hindered the search for enzymes and processes for other alternative feed stocks. So the use of corn for ethanol production has paved the way for the development of alternative feed stocks rather than hindered it. What is not clear is where the acres for production of switchgrass is going to come from if and when they do get their production processes and enzymes perfected. Right now I hear there is an acute shortage of grasslands for hay production already.

[Al_Smith]

Well now the sugar cane /beet growers are not the only people involved in agriculture related crops that are subsidized . ;)

[shelbycharger400]

shortage for grasslands..  well, last i heard, farmer dosnt get that much for a crop of hay.       wheat stock might be a good idea ,  you get the seed, for food,  and the grass for feed for animal or future ethanol?   that or feed the corn to the cow, and use the stocks for production of ethanol

[Gary_C]

The Great Sugar Shaft


You can't even begin to compare the relatively minor subsidies that corn farmers get to the price supports and import restrictions that surgar cane and beet producers get. Plus there is ample evidence that what little crop subsidies like those that corn and especially cotton get are just transfered to the landowners thru higher land rental prices. A large portion of payments from CCC go to NYC where there is very little farm land but there are wealthy estate land holders.

And unlike sugar, corn is traded in open markets and not subject to quotas or tarrifs.

Plus when you make ethanol from corn, only the sugars are used. The starch which is best part of the feed value is retained and sold for livestock feed. So there is little feed value lost when you make ethanol from corn.

[Ron Wenrich]

Farmers received $77 billion in subsidies for corn from 1995-2010 and $242 million for sugar beets.  When you look at it from a recipient standpoint, corn subsidies were double that to the farmer than sugar subsidies. 

http://farm.ewg.org/region?fips=00000&regname=UnitedStatesFarmSubsidySummary

There's also subsidies given to the blenders that help raise the price of the crop.  What would corn prices be if there wasn't a demand for the ethanol? 

[Kansas]

The comment on hay got me to doing some number punching.
Corn value per cost of ton. 250.00 based on 7 dollar corn (2000 divided by 56 lbs)
Hay is bring somewhere around 250 to 300 a ton in Texas.
Corn value per acre. At 180 bushel that means 1260 dollars per acre. (figuring good dryland corn)
Hay at 2.5 tons per acre. Figuring something like brome hay that does require fertilizer. 688.00 per acre at 275 ton.

But its like trying to compare apples to oranges. Most hay ground is hay ground because it isn't suitable for crop production. An exception would obviously be alfalfa. Also, the input costs would be much higher in corn, both in fertilizer, chemicals, field work,  handling and storage. The real farmers on the forum should feel free to pick apart my figures.

Wheat stubble can be made into a palatable food source by injecting anhydrous ammonia (nitrogen) into the bales. I been out of the business too long to remember the costs, plus the costs would have changed with the higher price of AA. But I would intuitively guess it would be quite a bit less that the cost of hay, maybe a 1/4.

Then maybe a better question to ask is this; switchgrass to be made into ethanol. What are the economics of that compared to hay. What are the economics of converting CRP ground into switchgrass, and is it a good idea.

[Gary_C]

Ron, here is some background on your source for info, the Environmental Working Group.

Environmental Worry Group

EWG has overseen a Reign of Error lasting more than two decades

I did not get into their numbers much after I saw who was presenting them, but I doubt their accuracy. For one thing, conservation payments are not the same as commodity payments. And disaster payments are mostly politically motivated, are just enough to pay the land rent, and should not be blamed on the farmers as they go mostly to the landowners. For the most part, disaster payments have been eliminated in favor of crop insurance subsidies and that money goes directly to insurance companies thru the USDA Risk Management Agency.

And again, inspite of the USDA's and Congress's best or poor efforts, these payments always end up in the hands of the landowners, and the largest volume of the payments go to large estate land owners. It is particularly true for the cotton program payments but also very true for corn and beans.

So these subsidies that everyone seems to hate are not for the farmers unless they own the land. And I know from personal experience that farmers just hate those government payments. We would rather our money came from the markets, not the government. Government payments just drive up the cost of production.

And I am still amazed that a home grown product is so disparaged in this country.

[Norm]

Kansas your numbers for hay are pretty accurate but the problem is that you have to transport it to get that high price. That being said with more and more acres being put into row crops alfalfa prices are on the rise in our area. I also like that it is used to bring some soil structure back along with it's fertilizer bump. We try to keep it in our rotation where possible as not all of our land is suitable for growing it.

[Al_Smith]

 

And again, inspite of the USDA's and Congress's best or poor efforts, these payments always end up in the hands of the landowners, and the largest volume of the payments go to large estate land owners. It is particularly true for the cotton program payments but also very true for corn and beans.

--and again it's politics .I've gotten on the web site which shows subsidies paid in these parts .As usual a majority goes to the largest land owners .I'm fine with that but explain to me how at times their toddler grand children recieve payments ? I guess it's always been that way,why change .

[shelbycharger400]

kansas... Hay at 2.5 tons per acre. Figuring something like brome hay that does require fertilizer. 688.00 per acre at 275 ton

is that figure a single cut crop at 8-12 in? height      i know in good summers here they can cut the hay 2 to 3 times..   

[Kansas]

Around here brome hay is cut once, usually in late June. I do have a neighbor that does a cutting in the fall as well, although that is a lot of foxtail mixed in. Its a cool season grass, so it usually doesn't do a lot in the summer. It is usually quite a bit higher than 12 inches in height. More than one deer fawn has got run through a swather. In good brome hay, you are pretty well cutting blind.