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Challenges to Producer Ownership of Ethanol and Biodiesel Production Facilities

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  • Kenkel, Philip L.
  • Holcomb, Rodney B.

Abstract

This study examines the rapidly expanding biofuels industry and identifies challenges for producer-owned biofuel projects. The U.S. ethanol industry has been growing rapidly, and biodiesel production is poised for similar growth. Producer involvement is driven by the desire to add value to farm commodities and the impact of biofuel projects on local grain prices. Local state and federal incentives have also stimulated producer interest. The long-run profitability of biofuel projects is driven by feedstock availability, access to market centers for biofuels, access to markets for coproducts, and utility costs and availability. The rapidly increasing size and scale of ethanol and biodiesel plants make it difficult for producers to fund these projects. Additionally, the development and adoption of new non-grain biofuel technologies may negate some comparative advantages of producers, such as feedstock cost and availability. The geographic expansion of biofuel projects into grain deficit regions will also create additional challenges.

Suggested Citation

  • Kenkel, Philip L. & Holcomb, Rodney B., 2006. "Challenges to Producer Ownership of Ethanol and Biodiesel Production Facilities," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(2), pages 1-7, August.
    • Handle: RePEc:ags:joaaec:43772
    DOI: 10.22004/ag.econ.43772
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    References listed on IDEAS

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    1. Kevin McNew & Duane Griffith, 2005. "Measuring the Impact of Ethanol Plants on Local Grain Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 164-180.
    2. Nalley, Lawton Lanier & Hudson, Darren, 2003. "The Potential Viability Of Biomass Ethanol As A Renewable Fuel Source: A Discussion," Staff Reports 15808, Mississippi State University, Department of Agricultural Economics.
    3. Kevin McNew & Duane Griffith, 2005. "Measuring the Impact of Ethanol Plants on Local Grain Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 164-180.
    4. Markham, Steve, 2005. "Distillers Dried Grains And Their Impact On Corn, Soymeal, And Livestock Markets," Agricultural Outlook Forum 2005 32831, United States Department of Agriculture, Agricultural Outlook Forum.
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    Cited by:

    1. Mônica A. Haddad & Gary Taylor & Francis Owusu, 2010. "Locational Choices of the Ethanol Industry in the Midwest Corn Belt," Economic Development Quarterly, , vol. 24(1), pages 74-86, February.
    2. Busby, David P. & Little, Randall D. & Shaik, Saleem & Martins, Angelina & Epplin, Francis M. & Hwang, Seonghuyk & Baldwin, Brian S. & Taliaferro, Charles M., 2007. "Yield and Production Costs for Three Potential Dedicated Energy Crops in Mississippi and Oklahoma Environments," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34854, Southern Agricultural Economics Association.
    3. Lambert, D.M. & Wilcox, M. & English, A. & Stewart, L., 2008. "Ethanol Plant Location Determinants and County Comparative Advantage," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(1), pages 117-135, April.
    4. Lin, C.-Y. Cynthia & Yi, Fujin, 2012. "Ethanol Plant Investment in Canada: A Structural Model," Institute of Transportation Studies, Working Paper Series qt7vd043zr, Institute of Transportation Studies, UC Davis.
    5. 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.
    6. Ribera, Luis A. & Outlaw, Joe L. & Richardson, James W. & Silva, Jorge A. da & Bryant, Henry L., 2007. "Mitigating the Fuel and Feed Effects of Increased Ethanol Production Utilizing Sugarcane," Biofuels, Food and Feed Tradeoffs Conference, April 12-13, 2007, St, Louis, Missouri 313700, Farm Foundation.
    7. Galinato, Suzette P. & Young, Douglas L. & Frear, Craig S. & Yoder, Jonathan K., 2011. "Will Washington Provide Its Own Crop Feedstocks for Biofuels?," Western Economics Forum, Western Agricultural Economics Association, vol. 10(1), pages 1-11.
    8. Busby, David P. & Philips, Andrew L. & Herndon, Cary W., Jr., 2008. "Construction Cost Sensitivity of a Lignocellulosic Ethanol Biorefinery," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6784, Southern Agricultural Economics Association.

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    More about this item

    Keywords

    Production Economics; Resource /Energy Economics and Policy;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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