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 News

26/06/2017 0:00 - Agricultural Commodities Market
JULIO CALZADA - FEDERICO DI YENNO
Argentina’s ethanol production capacity barely reaches 2% of the US capacity
 

Amidst the booming production in the United Stated in recent years, we proceeded to compare the ethanol industry from that country to the one of Argentina's. The results of the comparison can be inferred quickly and concisely from data in Table 1, where the supremacy of the United States is clearly evident. The several indicators for the ethanol industry sector of both countries can be detailed as follows:

A) Number of plants: Argentina has 14 important fuel ethanol plants, rather small compared with the 198 plants in the United States of America. That is to say that our country has only 7% of the total factories located in the USA. In Argentina these 14 plants are composed by those producing ethanol from sugar cane and the ones producing from corn.

 
 
 

B) Ethanol Industry production capacity: The American plants have a production capacity of 58.6 million cubic meters of ethanol per year. The Argentina’s plants have an annual production capacity of 965,350 m3 / year. This means that Argentina has just 1.6% of the normal ethanol production capacity of USA. The EIA (United States Energy Information Administration) statistics reflect the volume of fuel ethanol that can be produced over a 12-month period under normal operating conditions.

C) Ethanol annual production: The United States produced in the year 2016 about 57.9 million m3 of ethanol. Argentina, on the other hand, had a production of 890,000 cubic meters in the year. It implies that Argentina's annual production of ethanol in 2016 was barely 1.5% of the total produced by the United States of America for that year.

D) Nameplate production capacity across the country: The largest ethanol factory in the United States is located in Illinois, Decatur being ADM (Archer Daniels Midland Company) its owner. ADM is one of the largest grain exporters and agricultural processor in the world, based in Chicago, Illinois. This plant located a Decatur has a nameplate production capacity of 1,419,000 cubic meters in the year, a very high figure indeed. The largest ethanol production plant in Argentina is located in the city of La Florida, within the province of Tucumán. The company owner is ‘Bioenergética La Florida S.A.’. The plant has a production capacity of 150,000-m3 / year and processes sugarcane. This Argentine plant is rather small compared to the ADM plant in Decatur, Illinois: it has only 10% of the production capacity of the American mega factory.

E) Corn milled by each country to produce ethanol: The main input for fuel ethanol production in the United States is corn. US plants milled about 138.4 million tons of corn in the 2016/2017 marketing year. Argentina instead gets ethanol almost in equal parts from corn and sugarcane. Our country uses between 1.2 and 1.4 million tons of corn to obtain fuel ethanol. This figure represents only 1% of the corn used by the great country of North America - year after year - to produce ethanol.

F) Corn annual production in each country: The United States harvested about 384 million tons of corn in the 2016/2017 marketing year. In comparison, Argentina harvested about 38 million tons, according to estimates of GEA-BCR in the marketing year. This implies that Argentina only produces the equivalent of 10% of the annual corn crop of the United States. The Argentina marketing year begins March 1 for corn.

G) Ethanol production / corn crop ratio: As can be seen in the table attached to the article, the use of corn for fuel ethanol production in the United States accounts for the 36% of the 2016/17 marketing year crop. In the meantime, Argentina milled only 4% of the crop to generate ethanol. If we relate the corn consumption for ethanol production with the total domestic consumption, in the United States the ratio reaches 44%. Following the importance of the ethanol industry in the US, the production surpasses the US livestock corn consumption by far.

In this scenario, the Bioenergy industry sees with great concern the future of the United States environmental policy as the new administration dumped the Paris Agreement a few weeks ago. The exit could undermine America’s economic competitiveness, technological innovation, and global leadership in this sector. In case of withdrawing government support for ethanol production, it would have an enormous impact in the corn demand worldwide demand. In this scenario the grains prices would receive a big impact.

 
 
 

Our analysis provides further information on this topic. Table N° 2 shows the production capacity of the ethanol plants in the United States, by defense district. The main agricultural production area concentrates the greater part of the location for Bioethanol plants. As we see, there are 175 factories located in the states of Iowa, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota, Missouri, North Dakota, Nebraska, Tennensse, Ohio, South Dakota and Wisconsin. These plants have a processing capacity of almost 14,074 million gallons / year, representing about 90% of the total capacity of US ethanol production of 15,505 million gallons / year.

 
 
 

Table N°3 shows the 10 largest ethanol plants in the US. The country has four plants that have production capacities above one million cubic meters per year. We refer to: (a) the ADM plant in Decatur (Illinois) accounting 1,419,500 m3 / year; (b) the Marquis Energy LLC plant at Hennepin, Illinois, with a capacity of 1,287,000 m3 / year; ADM Plant in Columbus at the state of Nebraska with 1,184,833 m3 / year capacity and (d) ADM plant at Cedar Rapids in the state of Iowa with 1,135,623 m3 / year.

None of the 10 largest plants in the United States is below 500,000-m3 / year capacity. In contrast, Argentines plants are rather small. There are hardly three plants with capacities above 140,000 m3 / year: Bioenergética La Florida SA in the province of Tucumán with 150,000 m3 / year (as we said it process sugarcane), Promaíz in Alejandro Roca (Córdoba) with 145,000 m3 / year and ACA Bio in Villa María (Province of Córdoba) with 145,000 m3 / year, the latter two milling corn.

As can be seen in Table 4, there are 5 factories in our country that obtain ethanol based on corn: A) Promaíz (located in the town of Alejandro Roca, Province of Córdoba), which is a venture of Bunge and Aceitera Gral Deheza;

B) ACA Bio (Villa María Province of Córdoba);

C) Diaser (Province of San Luis); D) Bio 4 in Río Cuarto (Córdoba) and

D) Vicentín (in Avellaneda, Province of Santa Fe). These combined are capable to produce about 514,500 m3 of ethanol per the year.

On the other hand, there are plants that obtain ethanol in our country processing sugarcane. Five of them are located in the province of Tucumán, two in Salta and two in Jujuy. In total, according to information provided by the officials of the Ministry of Agroindustry of the Nation, the production capacity of these plants is around 450,850 m3 / year.

All of this implies that Argentina has a total production capacity - with its 14 main factories - of 965,350 m3 / year of ethanol.

 
 
 
 

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