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Economic factors associated with success or failure of dry-mill ethanol plants utilizing corn as a feedstock are analyzed and discussed. A spreadsheet model is used to conduct the analysis based on the assumptions and interactions of various factors. Plant managers and bankers were interviewed in the process of establishing baseline conditions of operation including capital cost per gallon of capacity, ethanol yield per bushel of corn ground, percentage of debt capital, operating expenses of natural gas, electricity, enzymes, chemicals, repairs, labor, and management. Sensitivities were determined and graphed to demonstrate the respective influence of corn price, ethanol price, natural gas price, ethanol yield, capacity factor, and interest rate-debt percent interactions. The model was used to predict the financial performance of a modern, well-sized dry-mill plants if the prices that occurred over the past decade with respect to corn prices, ethanol prices, prices of DDGS and CO2, natural gas prices, and interest rates were to re-play. Rates of returns on equity of dry-mill ethanol plants were compared to rates compiled in the last decade for a group of 200 farmers in southwestern Minnesota. Patterns of loan repayment, influence of technological changes, and the role of government subsidies are discussed.


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