|Ethanol yields for different feedstocks. Click to enlarge. Source: USDA.|
US Farms, a small, niche agribusiness company, has established a wholly-owned subsidiary, Imperial Ethanol, to build an ethanol plant based on the use of sugarcane and sugar beets as the feedstock.
To be located in Imperial County, California, the Imperial Ethanol plant will have an initial capacity of 50 million gallons per year with the capability to double production to 100 million gallons per year.
The company is looking at 3 potential areas to build ethanol production facilities. The ability to acquire the production facilities will depend on US Farms’ ability to obtain financing.
With our footprint into the farming and nursery sector, along with our numerous contacts in the Imperial Valley, we felt now was the right time to announce our future plans on our diversification of our current business model. Several private and public companies in the agricultural sector as of recently have made similar moves with their business diversifying into Ethanol production as it is a logical fit with the existing infrastructure and how a new energy source can be created through the growing of specific crops.—Yan Skwara, Chairman and President of US Farms
US Farms plans to finalize its first location in the 3rd quarter of this year. management’s target is to complete its first ethanol plant by the first quarter of 2008 and show revenues in the second quarter of 2008.
Should the plant come to fruition, it would be the first major sugar ethanol plant in the US.
A recent report by researchers from the US Department of Agriculture and Louisiana State University on the economic feasibility of the production of ethanol from sugar in the US has concluded that while such production could be economically viable in the short-term given the current high prices of ethanol, any moderation in prices could make it unprofitable for most sugar and raw sugar feedstocks by the summer of 2007. (Earlier post.)
Producing ethanol from sugar beets and sugarcane is estimated to be profitable at current ethanol spot prices and at about breakeven over the next several months, excluding capital replacement costs, based on current futures prices for ethanol. Over the longer term, the profitability of producing ethanol from sugarcane and sugar beets depends on the prices of these two crops, the costs of conversion, and the price of gasoline.