MUNCIE -- The proposed construction of nine ethanol plants in East Central Indiana is happening at a time when the rapidly growing ethanol industry might be headed into a bust period, some experts suggest.
"I'm not against ethanol by any means, but it can't continue to grow like this," says Christopher Hurt, an agricultural economist at Purdue University. "It's going to hit constraints, one of which is the availability of corn."
Hurt predicts that only seven to nine ethanol plants will be built state-wide during the next several years, not 18.
"The current expansion rate of the ethanol industry is about 70 percent," he said in an interview. "It's doubling every one year and five months. That is a rate that certainly cannot be sustained for another year."
Today, there are 107 ethanol bio-refineries in the United States with the capacity to produce more than 5 billion gallons of ethanol annually, according to the Renewable Fuels Association. Another 56 ethanol plants are under construction and will add another 3.8 billion gallons a year of production capacity within 18 months.
Gov. Mitch Daniels and Lt. Gov. Becky Skillman have attended ground-breaking ceremonies recently for ethanol plants in East Central Indiana, pointing out that when Daniels took office in January of 2005 Indiana had only one ethanol plant.
If all 18 of Indiana's announced plants are built, they would have the capacity to produce more than 800 million gallons of ethanol a year and to consume more than 600 million bushels of corn a year, according to a state department of agriculture fact sheet.
Indiana produced a record 929 million bushels of corn in 2004 and is expected to produce 856 million bushels this year.
Seventeen to 19 percent of Indiana's corn crop is fed to the Hoosier livestock industry. That percentage will increase if Indiana achieves the governor's goal of doubling pork production. About 30 percent of Indiana's corn crop is processed in the state for industrial and human products, including corn starch and high fructose corn syrup for the soft drink industry. The remaining 50 percent or so of Indiana's corn crop is shipped to Southeastern states to feed poultry, swine and other livestock, and to Japan, Mexico and other countries.
The weakest link
"This ethanol expansion is going to bid up the price of corn to a level where it is simply not profitable to use corn as the raw material for ethanol, and there is no other raw material they can use of that magnitude," Hurt said. "For ethanol to get that corn, it has to outbid somebody else who is already using it. Who's the weakest link?"
http://www.thestarpress.com/apps/pbcs.dll/article?AID=/20061126/NEWS01/611260339/1002
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