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Questions surround biofuels amid financial crunch

Two stories today deal with the question of biofuels in the US agri-business scheme of things: one that looks at the future of VeraSun, a significant interest in the corn-based ethanol scene. The other story deals with a forecast that as many as 40 ethanol plants in the US Midwest could be filing for bankruptcy early in 2009.


November 26, 2008
By BioFuel Lines via Crop News Weekly/AgriMarketing

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November 26, 2008

A pair of stories out the US paint a questionable picture of the biofuels industry.  From Crop News Weekly, comes this insider's perspective from BioFuel Lines:

The news on VeraSun Energy Corporation has been flying fast and furious. Just yesterday, the financially-troubled ethanol producer announced that it had received a non-binding unsolicited indication of interest to purchase substantially all of its assets. The identity of the third party was not disclosed, but some speculate that it could be Poet, LLC.

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The VeraSun announcement came just hours after Jeff Broin, CEO, Poet, LLC, Sioux Falls, SD, told the Associated Press that the company was in talks with a number of ethanol producers. But, Broin did not disclose the names of companies with which his company is talking.

Most likely any buyout of VeraSun would be welcome news to farmers concerned about having their corn contracts honored.

In fact, a large group of farmers (now more than 100) filed an objection last Friday to VeraSun’s motion in a Delaware bankruptcy court to be allowed to void corn contracts with as little as 10 days notice.

To see the rest of this story, go to: blog.farmindustrynews.com/biofuellines/2008/11/25/growers-in-limbo-as-verasun-fate-in-balance/

 

From Agri-Marketing Magazine comes a short piece about an investment banker who said he expects as many as 40 ethanol plants, including 16 of VeraSun's could be in bankruptcy in the next few months:

An Omaha investment banker predicts as many as 40 ethanol plants could be in bankruptcy by early next year. That according to a report in the Des Moines Register.

Mark Lakers of Agribusiness and Food Associates says that 40 figure includes the 16 plants owned by VeraSun Energy, which is currently operating under Chapter 11 bankruptcy.

Lakers expects the ethanol industry to go through a consolidation similar to what has happened the last two decades with the poultry and pork industries. "We believe that the number of ethanol producers will reduce from 150 to something closer to 50 producers in the next three to five years," says Lakers.

There is a tone of optimism to this piece, however, and you can view it at:

www.agrimarketing.com/show_story.php?id=51984