Volume 7, Issue 3
Published: April 29, 2013
No longer a fledgling industry

Minnesota-based industry analysts Christianson and Partners reviews the lay of the US ethanol land and offers tips to anyone looking to buy or sell facilities

 

No doubt about it, the US ethanol industry continues to consolidate. Although the origins of many plants lie in farmer-owned cooperative ventures, over time the landscape has changed. Today, most plants are operated as LLCs or as part of larger corporate structures, with venture capitalists and oil companies holding an ever-increasing share.

Market conditions in 2012 accelerated the industry consolidation already well underway - plants with underlying stability were able to ride out unfavourable commodity prices, while owners who came into the year already experiencing difficulty were faced with considering selling their plants.

Things are a bit different today than they were in the earlier round of challenges experienced by ethanol producers in 2008, however. Back then many plants were just getting off the ground, still optimising processes and heavily mired in startup expense and debt. By reviewing financial factors, such as earnings, it is clear that many plants were better poised in 2012 to weather a tough year because of experiencing years of steady profitability from 2009-2011.

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