Another Nebraska ethanol plant is shutting down. That means seven of the state’s 24 plants have now been idled.
Ag Processing Inc. (AGP) announced Friday it will idle its 55 million gallon-a-year plant in Hastings due to high corn prices and lower ethanol prices. The company gave no indication how long the shutdown may last, saying it will “continue to evaluate market conditions.”
Nebraska Ethanol Board administrator Todd Sneller says it’s possible some of the plants that have been idled across the U.S. won’t be reopened. He says the industry’s production capacity is simply greater than the current demand.
“The actual operational capacity that was put into place by the start of 2012 was somewhere in the neighborhood of about 14.3 to 14.5 billion gallons,” Sneller says, “and current ethanol demand is probably closer to somewhat over 13 billion gallons—but probably not up to 13.5 (billion).”
A drop in America’s overall fuel consumption is one of the factors. Another reason, Sneller says, is an increase in imports of sugarcane-based ethanol from Brazil, primarily destined for the California market.
“The low carbon fuel standard out there discriminates against corn ethanol, but gives additional benefits to sugarcane-based ethanol,” he says. “As odd as that may seem for a U.S. state to embrace that, that is in fact what is at play.”
Sneller says it’s possible that more of Nebraska’s ethanol plants will be idled in the coming months.