USDA May Use Rural Development Money to Assist Corn Ethanol Plants
18 October 2008
Des Moines Register. The US Department of Agriculture (USDA) may use rural development money to assist ethanol plants that have suffered losses in the volatile corn futures markets.
“Some plants are under pressure because they’ve been speculating on corn,” [Agriculture Secretary Ed] Schafer told reporters after speaking at the World Food Prize symposium breakfast.
The secretary said the department wouldn’t buy or sell grain or cover trading losses. Rather, he said, money could come from the USDA’s Rural Development office, which can provide up to $25 million to keep rural businesses operating. USDA Rural Development money has been used in the past to promote ethanol and biodiesel plants.
Squeezed by high prices for corn and natural gas, a number of ethanol plants have declared bankruptcy. Leading ethanol producer VeraSun Energy is taking a quarterly loss of up to $103 million because of losses in the corn futures market. It last month suspended an offering of 20,000,000 shares of its common stock, and retained Morgan Stanley to act in an advisory capacity to evaluate strategic alternatives based on “strategic interest” expressed by multiple parties.
Prices of both corn and ethanol have fallen recently along with the general slide in agricultural and energy commodity prices.
Oh for f**k's sake...
If the money is used for switching over the plant to cellulosic, then maybe I could see this. As operating cash though? Ugh.
Posted by: rob | 18 October 2008 at 12:26 PM
Right. How about changing to a non-food feedstock that can be price controlled? Switchgrass, husks and stover would keep these plants in business. Not changing to cellulosic now is throwing the money in the field.
Posted by: nrg nut | 18 October 2008 at 02:41 PM
Corporate socialism destroying better opportunities...
Posted by: GdB | 18 October 2008 at 09:17 PM
It seems impossible for these ethanol plants to fail with all the government support. It seems that they bought corn that they could not use, and tried to get into the financial business instead of making ethanol.
Corn ethanol is only good for corn whiskey. The US would have been better off if these managers had started drinking the product a few years ago.
There is no reason to make corn ethanol for fuel in the US. Ethanol can be made at oil refineries cheaper.
Whole countries are now being denuded of trees for biofuels. Over the past few weeks the enormous amounts of money spent on speculations of all types over the past few years was discovered missing. There are people who spent it. But they were not the ones who had minimum wage jobs or even those who were paid four times as much. It is only surprising that the computers that were programmed to speculate did not drop the markets to ZERO. ..HG..
Posted by: Henry Gibson | 19 October 2008 at 12:49 AM
Henry! You're not saying computer programs control... the world, are you??
Posted by: r2d2 | 19 October 2008 at 09:29 AM