Ethanol oversupply impact on Nebraska

Source: Karla James • Nebraska Radio Network  • Posted: Wednesday, March 14, 2012

Rising fuel prices is causing drivers to put the brakes on unnecessary trips. That is also having an impact on ethanol production in Nebraska. Troy Gavin with Midwest Renewable Energy is the general manager of ethanol plant near Sutherland and he tells us that is one reason but there is more to it than that. He says there were problems on the horizon when VEETC (Volumetric Ethanol Excise Tax Credit) expired in 2011. He says that created an oversupply in storage as ethanol was bought before that tax credit ended. He says they knew that would create an oversupply in storage and they are trying to work through that supply-demand imbalance.

Gavin says tanks are full some of that product has to work its way through the system before more is manufactured to refill those tanks. That means the plant is dark. Gavin stated they anticipated a downturn but didn’t think it would be this bad. He says it will likely be late April or the first part of May before they start production.

This is having an impact in other areas as well. Cattle feeders now are having a tough time getting a hold of a by-product of the ethanol plant, distiller’s grain. Gavin says with the high price of corn needed to make ethanol, selling distillers grain was a way they could make ends meet.