BURLEY, Idaho — Pacific Ethanol plants in Burley, Boardman, Ore., and Stockton, Calif., have started making ethanol for the first time utilizing beet-derived sugar.
New storage and handling infrastructure was installed at all three facilities to accommodate the refined beet sugar, which Amalgamated Sugar Co. forfeited to the federal government in lieu of repayment on temporary loans through the USDA’s Commodity Credit Corporation.
In late November, Amalgamated began shipments to Pacific Ethanol that will total roughly 125,000 tons of forfeited carryover sugar from the 2012 crop — equal to production from 27,000 acres, and about 15 percent of Amalgamated’s sugar output for the year.
Low sugar prices have led U.S. sugar companies to forfeit a combined 382,000 tons of sugar from a 9-million-ton 2012 U.S. crop. Most of the forfeitures will be used for making ethanol, according to Jack Roney, American Sugar Alliance director of economic and policy analysis. Roney said the industry hasn’t experienced widespread forfeitures since 2000. Only a small, experimental amount was used then for making ethanol in Minnesota and North Dakota plants.
“What we’re seeing now is really the first time any significant volumes of sugar, both beet and sugar cane, are going to ethanol,” Roney said.
Snake River Sugar Co-op Chairman Duane Grant said Amalgamated takes out low-interest, nine-month loans through the USDA program, using sugar as collateral, on behalf of its growers so they aren’t forced to sell sugar at harvest to repay bills. Sugar prices have dropped by 60 percent in the past 18 months, enticing companies to simply forfeit some of the sugar used as collateral rather than repaying the loan rate of 24.09 cents per pound.
Grant and Roney attribute the depressed market to Mexican growers dumping low-priced sugar on the U.S.
“The fact that there are forfeitures taking place all across the U.S. to the CCC just demonstrates that sugar prices are extremely depressed and the government has been ineffective in its efforts to manage the sugar supply as directed by Congress,” Grant said.
Paul Koehler, vice president for Pacific Ethanol, said throughout the next nine months his company will blend up to 15 percent finished sugar in with its corn-based ethanol feedstock.
“Sugar is the easiest thing to make ethanol out of,” Koehler said, adding corn requires the addition of enzymes to convert starches into sugar. “It fits really conveniently. It’s a good solution for USDA, for sugar producers and for ethanol producers.”
Koehler said the new infrastructure could prove useful in the event of future sugar forfeitures. He said his company and Amalgamated have also been discussing options for making ethanol from byproducts of sugar processing.
While Roney would welcome any new markets for byproducts, he sees little future for beet sugar in ethanol production, outside of emergencies. He noted the government has received just 4-6 cents per pound for sugar sold for making ethanol.
Looking forward, Amalgamated’s 2013 crop set yield records at better than 36 tons per acre, but Grant expects the crop will produce “about our normal amount of sugar” because the high tonnage was offset by low sugar content, averaging just 15.9 percent.