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Efficiency in Midwest US corn ethanol plants: A plant survey

Author

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  • Perrin, Richard K.
  • Fretes, Nickolas F.
  • Sesmero, Juan Pablo
Abstract
Continuation of policy support for the US corn ethanol industry is being debated due to doubts about the greenhouse gas effects of the industry and the effects of the industry on food prices. Yet there is no publicly available data on the economic and technical performance of the current generation of plants, which constitute the overwhelming majority of the industry. This study helps to fill that gap. Seven recently constructed ethanol plants in seven Midwest US states provided details on input requirements and operating costs during 2006 and 2007. Results show that technical performance is substantially better than current estimates available in the literature. Average net operating returns exceeded capital costs during the survey period, but price changes by mid-2008 reduced these margins to near zero. While the economic performance of the industry is currently viable, this study demonstrates that it can be threatened by current price trends, and certainly would be in the absence of current subsidies.

Suggested Citation

  • Perrin, Richard K. & Fretes, Nickolas F. & Sesmero, Juan Pablo, 2009. "Efficiency in Midwest US corn ethanol plants: A plant survey," Energy Policy, Elsevier, vol. 37(4), pages 1309-1316, April.
    • Handle: RePEc:eee:enepol:v:37:y:2009:i:4:p:1309-1316
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    Citations

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    Cited by:

    1. Sesmero, Juan P. & Perrin, Richard K. & Fulginiti, Lilyan E., 2010. "Environmental Efficiency Among Corn Ethanol Plants," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61650, Agricultural and Applied Economics Association.
    2. Ghoddusi, Hamed, 2017. "Price risks for biofuel producers in a deregulated market," Renewable Energy, Elsevier, vol. 114(PB), pages 394-407.
    3. Mishra, Gouri S. & Yeh, Sonia, 2010. "Analysis of Lifecycle Water Requirements of Transportation Fuels: Corn-based Ethanol - Model Description," Institute of Transportation Studies, Working Paper Series qt4gg2g2s6, Institute of Transportation Studies, UC Davis.
    4. Jason Fewell & Cole Gustafson, 2010. "Do lender‐imposed sweeps affect ethanol technology investment?," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(2), pages 169-183, August.
    5. Whistance, Jarrett & Thompson, Wyatt, 2010. "How does increased corn-ethanol production affect US natural gas prices?," Energy Policy, Elsevier, vol. 38(5), pages 2315-2325, May.
    6. Wise, Marshall & Dooley, James & Luckow, Patrick & Calvin, Katherine & Kyle, Page, 2014. "Agriculture, land use, energy and carbon emission impacts of global biofuel mandates to mid-century," Applied Energy, Elsevier, vol. 114(C), pages 763-773.
    7. Wamisho, Kassu, 2012. "The Shadow Price of GHG Reduction in Corn Ethanol Plants," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124719, Agricultural and Applied Economics Association.
    8. Jinho Jung & Juan Sesmero & Ralph Siebert, 2022. "A structural estimation of spatial differentiation and market power in input procurement," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 613-644, March.
    9. Wamisho, Kassu, 2012. "The Shadow Price of GHG Reduction in Corn Ethanol Plants," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126862, International Association of Agricultural Economists.
    10. Sesmero, Juan P. & Perrin, Richard K. & Fulginiti, Lilyan E., 2012. "Technology, Markets, and Ethanol Plants Shutdown Price," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124915, Agricultural and Applied Economics Association.
    11. Juan Sesmero & Richard Perrin & Lilyan Fulginiti, 2018. "A nonparametric frontier measure of marketing efficiency: An illustration with corn ethanol plants," Agribusiness, John Wiley & Sons, Ltd., vol. 34(3), pages 579-596, June.
    12. Jason Wood & James Nolan, 2021. "Plant location decisions in the ethanol industry: a dynamic and spatial analysis," Computational Economics, Springer;Society for Computational Economics, vol. 58(1), pages 103-132, June.
    13. Juan P. Sesmero & Richard K. Perrin & Lilyan E. Fulginiti, 2016. "A Variable Cost Function for Corn Ethanol Plants in the Midwest," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 565-587, September.
    14. Wu, Bo & Wang, Yan-Wei & Dai, Yong-Hua & Song, Chao & Zhu, Qi-Li & Qin, Han & Tan, Fu-Rong & Chen, Han-Cheng & Dai, Li-Chun & Hu, Guo-Quan & He, Ming-Xiong, 2021. "Current status and future prospective of bio-ethanol industry in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).
    15. Jinho Jung & Juan Sesmero & Ralph Siebert, 2020. "Spatial Differentiation and Market Power in Input Procurement: Evidence from a Structural Model of the Corn Market," CESifo Working Paper Series 8088, CESifo.

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    Keywords

    Corn ethanol efficiency;

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