USDA questions sugar-to-ethanol profits

July 11, 2006

by FREDERIC J. FROMMER, Associated Press WriterWASHINGTON – Making ethanol from sugar could be profitable with the current high demand for the gasoline substitute, but it probably won’t be for long, the Agriculture Department said Monday.

At current market prices for ethanol, converting sugarcane, sugar beets, raw sugar and refined sugar to ethanol would be profitable, the department said in a report. However, the report added that those market prices are expected to drop as more ethanol is produced, mostly from corn.

“At this high, unusual price, I can conclude that it’s economically feasible to produce ethanol from sugarcane and sugar beets,” the USDA’s chief economist, Keith Collins, said at a news briefing. “However, I would not want to pour concrete based on $3-a-gallon ethanol prices” because the futures market predicts ethanol will drop to $2.50 by next year.

At that price, sugar to ethanol would not be economically feasible, Collins said.

The report concluded that sugarcane and sugar beets were nearly 2 1/2 times as expensive to turn into ethanol as corn.

“Corn certainly has the competitive advantage in the current market environment,” Collins said.

The report did find that molasses, a byproduct of sugarcane and sugar beets, could be produced at a price in the neighborhood of corn. But Collins said there isn’t much molasses made in the United States, negating it as a significant source of ethanol.

The report was put together through a cooperative agreement between USDA and Louisiana State University. It said no U.S. plants currently produce ethanol from sugar.

Sugar in the U.S. is made from two sources: beets in some northern and western states, and cane in a few southern states and Hawaii. Minnesota is the largest producer of sugar produced from beets, while Florida leads in sugar from cane, according to the American Sugar Alliance, a trade group.

Some lawmakers from those states have been pushing sugar-to-ethanol, citing the model of Brazil, which produces ethanol made from sugar cane. But Collins noted that Brazil has cheaper sugar than the U.S.

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On the Net:

Agriculture Department: http://www.usda.gov

Source: Yahoo

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No Responses Yet to “USDA questions sugar-to-ethanol profits”

  1. shocking said

    the only profitable ethanol is the one human consume as beverages

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