Ethanol industry recovers

3rd February 2010

THE global ethanol industry is slowly recovering after the drop in oil prices over the past twelve months resulted in extremely tight margins for bioenergy production.

Pacific Seeds’ Sorghum and Bioenergy Global Manager Scott Gibson said the slow upturn in the once booming ethanol industry is due to slightly elevated oil prices and improved hedging and purchasing by the bioethanol manufacturers.

“Grains such as corn were being bought for top dollar when the drop in oil prices occurred, which made biofuel operations very difficult. With corn prices back to around $4 and oil prices up to $80 per barrel, it becomes profitable again,” Mr Gibson said.

Mr Gibson said countries such as Brazil and the United States produce massive amounts of ethanol from sugar cane and grain respectively, but when crude oil, petroleum and diesel is cheaper, it makes it difficult for biofuels to compete with cheap fossil fuels.

He said while farmers in Brazil are making more money out of their sugar cane producing sugar rather than ethanol, they still support bioenergy production for the extra security it gives.

“Farmers would like to see a greater number of outlets for their produce and that is what bioenergy can provide for the producer.”

“Producers can determine the outlay for their crop production and can make a decision as to bioenergy production or stock feed or human consumption,” Mr Gibson said.

He said advances in crop types, crop yield and grain quality will assist all stakeholders, as these advances will provide improved varieties to assist livestock as well as bioenergy production.

Mr Gibson said Australia’s processing plants have set a production target of 350 megalitres of ethanol by 2012, which can be achieved if high crop quality can be maintained.

“Pacific Seeds is developing sorghum varieties that carry particular traits for energy production. We are utilising three breeding programs in Australia, the United States and Argentina in order to get high yields, high starch levels, high digestibility and good hybrid vigour.”