'ETHANOL BOOM OF A FEW YEARS AGO IS ON HOLD'

(Kearney Hub) — KearneyHub.com reports, "Investors and entrepreneurs who rushed to develop ethanol plant projects in Nebraska just a few years ago have been in a wait-and-see mode the past few years." Some of the reasons behind the slowdown include "a doubling of construction costs; spikes in corn prices, especially in summer 2008; and a recession that turned off funding taps," according to the story. Also, according to one Kearney-area ethanol businessman, "most projects announced a few years ago probably were little more than an idea." Todd Sneller of the Nebraska Ethanol Board says he "doesn’t expect another rush of start-ups" and that "investments likely will be made by industry veterans and established agribusiness companies that have 'strategic reasons' to go into ethanol production." Read the article at http://www.kearneyhub.com/news/local/article_55917066-0831-11df-8fcf-001cc4c03286.html>

'NEBRASKA ETHANOL PRODUCTION HITS RECORD HIGH'

(Nebraska Ag Connection) -- Nebraskaagconnection.com reports that Nebraska ethanol plants produced a record 127.1 million gallons of ethanol in the month of September, an increase of 8.6% since 2008. Nebraska ethanol generates millions of dollars of economic activity by exporting 96.2% of Nebraska-produced ethanol out of state. Nebraska ranks second nationally in ethanol production. <http://www.nebraskaagconnection.com/story-state.php?Id=984&yr=2009>

"EPA DELAYS DECISION ON MORE ETHANOL IN GASOLINE'

(Reuters) -- Reuters.com reports that the EPA said on Tuesday it needs more time to decide whether to approve an industry request to boost the amount of ethanol blended into gasoline. The agency "was supposed to decide by Dec. 1 on a petition" on whether to let gasoline contain up to 15% of ethanol, which now is available mostly in 10% and 85% blends.

ETHANOL INDUSTRY IS BOUNCING BACK

(DomesticFuel.com) -- DomesticFuel.com reports that "according to the Governors’ Biofuels Coalition (GBC), Nebraska’s ethanol industry has nearly recovered from the economic doldrums it faced last year and is back near full production capacity." According to Todd Sneller of the Nebraska Ethanol Board, "during the last three to four months plants have been starting to operate much closer to their operational rate of capacity, so if they were operating at 70% to 80% of capacity, they are now operating 'much closer to 100% of capacity.'"

Read the full story at <http://domesticfuel.com/2009/09/03/nebraska-ethanol-industry-bounces-back/>

UNL SCIENTISTS CONTINUE TO HONE USE OF ETHANOL BYPRODUCTS IN CATTLE FEEDING

(Nebraska Ag Connection) -- Nebraska Ag Connection reports that UNL scientists "are continuing to refine how the state can best take advantage of its unique mix of corn, cattle and ethanol production. One key focus is expanding use of ethanol byproducts in cattle feeding."

According to the article, UNL animal scientists have been leaders for years in this field. In the 1990s, they proved the benefits of feeding wet byproducts to cattle instead of drying the material, which aided development of Nebraska's ethanol industry. The story notes that recent efforts include "development of Cattle CODE, an online computer program that feedlot operators can use to predict cattle performance and economic returns from feeding byproducts, based on individualized information such as grain, byproduct and transportation costs."

UNL researchers are also "looking into feeding a higher percentage of ethanol byproducts to cattle."

For more, go to
<http://www.nebraskaagconnection.com/story-state.php?Id=349&yr=2009>

ETHANOL PRODUCERS SAY NEW RULE UNFAIR

(The Hill) -- The Hill reports that Obama "administration officials proposed a rule Tuesday that may make it harder for ethanol producers to meet greenhouse gas emissions standards in a 2007 energy law."

According to the story, the decision to factor in "indirect land use changes" could raise ethanol’s carbon footprint higher than that of conventional gasoline production, and could limit future production of corn-based ethanol in particular. Bob Dinneen, president and CEO of the Renewable Fuels Association, criticized the proposed rule. EPA Administrator Lisa Jackson "said the proposed rule would also include instructions on how ethanol producers could meet the greenhouse gas emissions cuts relative to gasoline."

See the story at
<http://thehill.com/business--lobby/ethanol-producers-could-face-tougher-standards-2009-05-05.html>

OBAMA TO TEST ETHANOL STANDARD

(AP/CNSnews.com) - The Associated Press reports that "President Barack Obama's commitment to take on climate change and put science over politics is about to be tested as his administration faces a politically sensitive question about the widespread use of ethanol: Does it help or hurt the fight against global warming?"

According to the article, "the EPA is close to proposing ethanol standards. But two years ago, when Congress ordered a huge increase in ethanol use, lawmakers also told the agency to show that ethanol would produce less pollution linked to global warming than would gasoline." The AP notes that "environmentalists, citing various studies and scientific papers, say the agency must factor in more than just the direct, heat-trapping pollution from ethanol and its production. They also point to 'indirect' impacts on global warming from worldwide changes in land use, including climate-threatening deforestation, as land is cleared to plant corn or other ethanol crops."

The article states that "if indirect emissions from expected land use changes are included, ethanol probably would fail the test." An EPA spokeswoman declined to say when an agency proposal would be issued.

See the story at <http://www.cnsnews.com/public/content/article.aspx?RsrcID=47556>

ETHANOL PLANT REOPENS BUT 95% OF FARMERS AGREE TO PRICE CONCESSIONS

(Lincoln Journal Star) — A northeast Nebraska ethanol plant has resumed production after closing down because of financial problems. The board chairman of Husker Ag in Plainview, Neb. says more than 95% of the farmers who deliver corn to the plant agreed to ease the terms of their contracts. Chairman Mike Kinney says the farmers agreed to let Husker Ag pay them a portion of their contacted price over several years instead of immediately. The plant near Plainview, which is about 30 miles northwest of Norfolk, closed earlier this month, citing volatility in the corn, oil and ethanol markets.

TWO NEBRASKA ETHANOL PLANTS ON AUCTION BLOCK

(Lincoln Journal Star) -- For many of the people awaiting the outcome of VeraSun’s Chapter 11 bankruptcy, just about any action had come to seem preferable to no action. Eleven weeks after the nation’s second-largest ethanol producer filed for reorganization, the Sioux Falls, S.D., company announced that seven of its 16 ethanol plants, including those at Ord and Central City, will be made available for auction purchase in March. In exchange for additional debt financing from a lender group led by AgStar Financial Services in Mankato, Minn., the struggling company has agreed to an auction schedule that is open for bids March 16. The projected sale closing date is March 31. Several central Nebraska farmers had thousands of dollars worth of corn under contract for delivery to VeraSun at the time of the bankruptcy; they are welcoming signs of movement. In reacting to Friday’s news, Ord businessman Gaylord Boilesen was gratified to learn employees will continue to be paid at a plant that he helped bring to town. Mark Lakers of Agriculture and Food Associates in Omaha expects “stronger Nebraska ethanol plants to step up and buy another plant.”

OBAMA FACES KEY DECISIONS ABOUT ETHANOL

(The Hill) -- President-elect Obama’s support for biofuels faces a few early tests, including a decision on whether to provide more aid to the corn ethanol industry, which critics say already gets too big a piece of the money pie.

The corn ethanol industry receives $2 out of every $3 the government spends to support renewable energy, according to a new report from the left-leaning Environmental Working Group (EWG) based on data from the Energy Information Administration. The Renewable Fuels Association (RFA), which represents corn ethanol makers, submitted a proposal to the Obama transition team for inclusion in the economic stimulus package that asks for $50 billion in loan guarantees and $1 billion in immediate credit to finance ongoing operations.

Corn ethanol producers have fallen on hard times recently. One major producer has declared bankruptcy. “Any stimulus package in part designed to spur clean, green economy has to recognize the importance of renewable fuels,” said Matt Hartwig, a spokesman for RFA. Hartwig said a number of ethanol projects have been delayed because of the difficulty in getting credit. Government help would allow construction to begin again. But a spokesman for EWG said ethanol mandates have led to more corn production, which has further polluted streams and rivers with fertilizer runoff. A better way to spend the money that now goes to support ethanol would be to increase support for solar and wind power to produce electricity, the environmental group said.

A few tricky policy questions likely will await the Obama administration as well. RFA and other ethanol makers want the EPA, for instance, to lift a limit on the amount of ethanol that can be blended with traditional gasoline. The current limit is 10%. Ethanol makers want it raised to at least 12% in part to accommodate the production increases required under the Renewable Fuel Standard (RFS) that was included in the energy bill of 2007. A group of manufacturers, including automakers, worry that higher ethanol content could damage engines. The ethanol industry disputes that contention. Other key issues include the 2007 energy bill's call for corn ethanol production to reach 15 billion gallons annually by 2015. (An additional 21 billion gallons of “advanced biofuels,” like cellulosic ethanol, would have to be blended with gasoline by 2022.)

As a candidate, Obama pledged to support the development of 60 billion gallons of biofuels annually by 2030. But environmentalists say biofuels of all stripes don’t provide the environmental benefits once thought. Another looming issue is sugarcane ethanol from Brazil. Brazilian sugarcane producers argue they are unfairly kept out of the U.S. market because of a tariff on ethanol imports. The 54 cent ethanol tariff expires in 2010.

ECONOMIST: BLENDING WALL STANDS IN WAY OF ETHANOL GROWTH

(Agriculture.com) -- Ethanol production opened the door to the renewable fuels industry. The industry now must get past an imposing wall of federal regulations and market conditions if it hopes to grow, says a Purdue University agricultural economist in a university report. "The ethanol industry is now faced with what is called a 'blending wall,'" says Wally Tyner, an energy policy specialist. Unless the barrier is removed, ethanol production could level off by 2010, Tyner says. The blending wall refers to the amount of ethanol gasoline companies are permitted to blend with petroleum-based fuel. Federal standards set the amount at 10% of gasoline consumption. There are too few cars and trucks on the nation's roads capable of running on any gasoline with an ethanol blend higher than 10%, or what is commonly called E10, Tyner says. Some in the ethanol industry have proposed that E10 be replaced by an E15 or E20 blend, thereby increasing ethanol use. However, automobile manufacturers do not believe today's E10 vehicles can run on a higher ethanol blend, Tyner says.

MORE THREATS TO ETHANOL MARKET SHARE

(Lincoln Journal Star) -- Due in part to oil prices and national energy policy, the market penetration of ethanol In Nebraska recently reached an all-time high of almost 90 percent. Now turmoil in the ethanol industry has cast doubt on ethanol marketers' ability to keep the dime advantage they have held at the pump in Nebraska elsewhere for most of the past five years. Gas prices continue to plummet. In its daily report delivered Wednesday, AAA says the Nebraska statewide average sits at $1.81 for a gallon of regular, down from $3.13 a year ago. As of last week, regular unleaded gasoline was the cheaper option at the seven BP stores owned locally by Salem Oil Co. A Journal Star check of other Lincoln service stations gave the price advantage to regular unleaded in eight of 14 cases, typically $1.69 versus $1.79. This suggests that ethanol, despite its connection to Nebraska agriculture, doesn't have nearly the brand loyalty of, say, Husker sweatshirts. But despite recent developments at the pump in Lincoln and elsewhere, Todd Sneller of the Nebraska Ethanol Board said the ethanol industry will stay afloat because ethanol sales nationally are anchored in a federal renewable fuels standard (usage requirement) and clean air initiatives in California and numerous other places. The federal mandate is scheduled to get bigger over the next few years.

AURORA ETHANOL PLANT OPENING DELAYED

(Lincoln Journal Star) — Aventine Renewable Energy Holdings Inc. will delay the opening of its new ethanol plant in Aurora by roughly three months because of cost concerns. The Pekin, Ill., company had planned to open the 113-million-gallon plant next March but now is shooting for June. Aventine’s Daniel Trunfio says the company is still committed to completing its Nebraska project. But he says the construction delay will help Aventine stretch its resources.

CATTLE AND ETHANOL AN OPPORTUITY FOR NEBRASKA

(High Plains/Midwest Ag Journal) -- Distillers grains, the co-product from ethanol production, has helped strengthen Nebraska's economy and increase the efficiencies in feeding cattle in the state, according to Craig Uden of Darr Feedlot in Cozad, Neb. According to an analysis by the Renewable Fuels Association, ethanol plants across the country produced 23 million metric tons of livestock and poultry feed last year. Uden said the availability of distillers grains has been tremendous for Nebraska. "It's a golden opportunity for this state," he said. "Because we have cattle and corn, we have an advantage over most states." Although distillers grains can be dried and shipped across the country, the biggest economic benefit comes when it can remain "wet" or only partially dried and delivered to nearby livestock operations.

MORE ETHANOL IN THE NEWS

Nebraska Cattlemen oppose ethanol mandates

(KRVN.com) -- According to Nebraska Cattlemen leaders, the ethanol hearing hosted Monday by Senators Ben Nelson and Tom Harkin in Omaha was a great opportunity to hear all sides of the energy debate. But Michael Kelsey, Nebraska Cattlemen executive vice president, said the state's largest industry, beef, was not been invited to speak. According to Kelsey, "renewable fuels are very important to the Midwest, and the nation as a whole," but the Cattlemen believe that "mandating production and usage has never been good over the long term for any industry, for several reasons." Mandates promote inefficiency and set an artificial demand, Kelsey said. "The Renewable Fuel Standard (RFS) next year will require approximately 3.5 billion bushels of corn, which is nearly 30% of what is currently grown in the U.S., Kelsey said. "Remember that the RFS is a mandate, meaning the 3.5 billion bushels of corn must be used to produce fuel and cannot be used for food, feed or export." Kelsey added that the RFS does not promote a working relationship between industries, but instead forces a relationship.

'Sens. Nelson, Harkin optimistic about ethanol, ag futures'

(AP) -- Two U.S. senators emerged from a special ag committee hearing on food, feed and fuel production with a strong sense of optimism. Sens. Tom Harkin of Iowa and Ben Nelson of Nebraska were in Omaha Monday gathering information about the changing economic landscape for agriculture and renewable fuels' production. Harkin says that as the biofuel industry grows there will be some headaches. But he says he believes that most people and businesses can get through the rough spots, given proper federal policies and advice from the private sector.

'Ethanol from corn cobs, corn fiber touted at national conference in Omaha'

(Omaha World-Herald) -- At a national ethanol conference last week in Omaha, South Dakota-based ethanol producer POET announced that it would begin making cellulosic ethanol from corn cobs and corn fiber at a Scotland, S.D., pilot plant by the end of 2009. The company plans to open a commercial plant in Emmetsburg, Iowa, by 2011, said Jeff Broin, POET's chief executive officer. That plant would produce 25 million gallons of ethanol per year using corn fiber and corn cobs. About 1,200 people - farmers, renewable energy experts, and people working in the ethanol industry - are attending the conference at Omaha's Qwest Convention Center. The event includes a trade fair featuring about 200 businesses that serve the ethanol industry.

'Gov. Heineman links ethanol to security'

(Omaha World-Herald) -- Ethanol supporters attending a national conference last week in Omaha continued to defend corn-based ethanol as a key component to reducing American dependence on gasoline. Gov. Dave Heineman said the federal government has been slow to address an issue that affects national security. "For 25 years and maybe more, the federal government has talked about reducing our reliance on foreign oil — and they haven't done a doggone thing about it," he said. "It's time we did something. America needs leadership when is comes to energy, and ethanol is particularly part of that future."

'Lower corn costs likely to help livestock and ethanol industries'

(Nebraska Farmer) -- Earlier this year, it was thought that the floods in the Midwest had devastated any chance of a bumper crop. However, warm weather and good growing conditions have helped crops stage an incredible comeback. Last week’s USDA August Crop Report shows the potential for the second largest corn harvest in history. Although the estimates look promising, USDA Chief Economist Joe Glauber says anything could happen to the crop which is a week to 10 days late due to delayed planting. Because of the predictions of a large crop, prices are likely to move lower helping both the livestock and ethanol industries.

'Oil prices slide close to $110 per barrel'

(AFP) -- World oil prices dropped near $110 on Tuesday as traders expressed relief after Tropical Storm Fay avoided oil and gas production facilities in the Gulf of Mexico. The market was also dragged down by worries that weaker U.S. oil demand could spread to Europe and Japan, analysts said.

BACK FROM VACATION

I had a great time out of the office with my family. Now I am getting caught up on my reading. Here are a few items I thought might be of interest to you.

Larry Kopsa CPA

ETHANOL INDUSTRY DODGES A BULLET

(Successful Farming magazine) -- Yesterday, the Environmental Protection Agency looked at the evidence and concluded that ethanol isn't hurting the economy enough to cut a government mandate to use ethanol in half this year. The news was welcomed by ethanol and corn interests. "We are very pleased -- not surprised -- but we are very grateful," said National Corn Growers Association president, Ron Litterer of Greene, Iowa. Several economic studies, including analysis by Iowa State University and Texas A&M University have shown that ethanol is a small factor in rising food prices and that higher energy costs and fuel prices had more to do with recent food price inflation. However, a disappointed National Cattlemen's Beef Association indicated that this won't be the last request for a waiver. "We will continue our efforts to ease the burden of tight feed supplies for our cattle producers, and will encourage other states to file for waivers from the RFS, NCBA president, Andy Groseta, said in a statement released Thursday.

NEBRASKA FARM REAL ESTATE VAULE, CASH RENTS HIGHER

(Nebraska Ag Connection) -- Nebraska's farm real estate value rose sharply during 2007, extending a trend that began in 1993, according to the USDA. Farm real estate value on January 1, 2008, averaged $1,460 per acre, a record high. This is up $230 per acre or 19% higher than last year's level. Cropland value increased 20% from last year to $2,270 per acre, with dryland acreage averaging $1,950 per acre and irrigated cropland at $2,900. Pastureland, at $530 per acre, was 23% above a year ago. Cash rents paid to landlords for cropland increased from last year and were also a new record high. Irrigated cropland rent averaged $155 per acre, an increase of $16. Dryland rent increased to $95 per acre, also up $16 from a year earlier. Pasture rented for cash, which averaged $14.20 per acre, rose $.20 from 2007. Find agricultural statistics for your county at www.nass.usda.gov.


EXPECT 20% TO 30% RISE IN FARM LAND LEASE RATES IN

(Agriculture Online) -- For the first time since the big U.S. corn and soybean buys by the Soviet Union in 1973, the U.S. farmland market is being driven by demand, not supply. That means some farmers could be "modestly shocked" by what they see when they go to sign 2009 farmland lease agreements. Demand continues to take land prices higher, and will continue to do so, at least in the near term, says CEO of the Westchester Group, Inc., Murray Wise. That could mean a 20% to 30% increase in farmland leasing rates in 2009, the farmland real estate analyst says. Wise sees million of reasons the current grain market volatility won't open the chute in the land market. One reason that the farmland market won't see a slash like the mid-1980s: The number of farms operating -- and more importantly, growing -- with no debt associated with land equity has grown considerably, and Wise sees this as continuing under current conditions.

SENATE AG HEARING ON ETHANOL IN OMAHA

(AP) — The U.S. Senate Agriculture Committee is scheduling a hearing in Omaha Aug. 18 to discuss ethanol’s effect on corn and food prices and examine the heated debate surrounding the biofuel. Sen. Ben Nelson said Wednesday during a telephone news conference that ethanol has unfairly been demonized by grocery associations, cattle organizations and others as the main cause for higher food prices and higher corn prices, which have ebbed in the past month.

NEW ETHANOL PLANT IN OMAHA USING FOOD WASTE BYPRODUCTS

(AP) — A Minnesota-based company says it will be building and operating a 1.5 million-gallon ethanol plant in Omaha that will use food waste byproducts. The company is Diversified Ethanol of Burnsville, Minn., a wholly owned subsidiary of Greenbelt Resources Corp., which also is based in Burnsville. Diversified Ethanol says it has gotten an order to build the plant and will own 20% of it. The company says the ethanol will be produced from the waste byproducts of tortillas, bread, and cereal production.

ETHANOL PLANTS FOCUS ON RISK MANAGEMENT

(Aurora News Register) -- As corn prices soar near the $8 mark, owners and managers at Nebraska’s 21 ethanol plants are focusing on risk management techniques with their ultimate success hinging on the ability to anticipate the cyclical nature of the commodities business. Most of the companies already up and running in the state “are on pretty solid ground” in that respect, according to Todd Sneller, administrator of the Nebraska Ethanol Board. These days, however, there is little room for error. “While we hear a lot about $7 and $8 corn, I suspect most Nebraska plants are not operating with costs at that level,” Sneller said. “Many of the managers I’ve talked to have been through these cycles before and have been managing risk and building up capital reserves. Because of that foresight they will be better able to weather these challenging economic times.” Debt is another significant variable in the health of individual plants, Sneller noted. Many of Nebraska’s plants have been in operation for a period of time, allowing them to amortize much of that debt.

RISING FEED & FUEL PRICES - JUSTIFICATION FOR LOWERING ETHANOL USE MANDATES?

I found this article in the May 29th issue of Sorghum Notes. If you are interested in Ethanol, you may want to check it out.

CALL TO ACTION: Texas Governor's Request for RFS Waiver Open for Comment in Federal Register

"On April 25, Texas Governor Rick Perry sent a letter to the Environmental Protection Agency (EPA) requesting a waiver of the Renewable Fuels Standard (RFS), citing rising feed and fuel prices as justification for lowering ethanol use mandates. The EPA has published notice of receipt of the request in the Federal Register and the notice is open for comments.

Despite the rampant negative press that ethanol is receiving right now and despite well-funded attempts to scapegoat ethanol for higher food prices and hunger around the world, numerous studies have concluded that repealing the RFS waiver will not, in fact, lead to lower food prices. An Iowa State University study even concluded that fuel would be 29 to 40 cents more expensive if ethanol were not blended into the fuel supply. Furthermore, the on-farm cost share of each dollar spent at the grocery store on food is less than 20 cents, total.

In order to preserve mandates and contribute to the maintenance and growth of the renewable fuels industry, it is vital that farmers comment in favor of biofuels in the Federal Register. Comments must be received by June 23, 2008 and should preferably be faxed or submitted electronically. Comments sent via postal mail may be delayed by Capitol Hill mail screening. The following methods may be used to submit comments:

• Web: http://www.regulations.gov/fdmspublic/component/main?main=DocumentDetail&o=09000064805f83d2 Follow the on-line instructions for submitting comments.


• E-mail: a-and-r-docket@epa.gov.


• Fax: (202) 566-1741.


• Mail: Air and Radiation Docket, Docket ID No. EPA-HQ-OAR-2008-0380, Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. Please include a total of two copies.

Comments must include the following identification: Docket ID No. EPA-HQ-OAR-2008-0380. Extensive directions including privacy information are available for download at http://www.sorghumgrowers.com/. For ideas or further information, please call the NSP office at (800) 658-9808."