A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Ethanol production isn’t profitable anymore.

03 November 2008



A growing number of American ethanol producers, one of the two main bio-fuels production channels, are threatened with bankruptcy. Last October already, Gateway Ethanol as well as other small producers shut down operations. On October 31, it was VeraSun Energy Corp’s turn, the main United States ethanol producer (14 distilleries) listed on the Stock Exchange, to ask for protection under chapter 11. And the other two large listed ethanol producers only seem to be able to preserve their margins through drastic cost controls and postponement of investments initially planned in the first half of 2009. Three reasons are at the origin of the profitability shortage of the ethanol sector: an excess of ethanol production, sky-rocketing corn prices, the key resource used for ethanol production, and the recent drop in the price of oil, which doesn’t encourage ethanol consumption.

Hence, it seems that ethanol producers, just like food product manufacturers, are subject to the same laws: a hyper-volatility of raw materials which increases manufacturer uncertainty regarding the quantities which will finally be produced and sold. Additionally, ethanol consumption is totally dependent from the oil price level. Production of bio-fuels is therefore not, as has been asserted many times, the unique remedy to price hyper-volatility and farmer revenues. Complementary action therefore needs to be conducted upstream through adequate regulatory agricultural policies.

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Paris, 24 April 2019