:4—Lancaster Farming, Saturday, June 6,1981
E'
Buy fuel, sell grain
There certainly has been enough
written and said about on-farm
alcohol production.
The idea sounds so good many
farmers are forging ahead with
their own stills. They’re making
alcohol to be used as fuel for their
machinery.
On the surface, alcohol
production looks like a good deal. A
fanner takes some of his own
crops, most likely com, and turns
them into motor fuel. That saves
money and reduces the amount of
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farm
Talk
Jerry Webb
imported
agriculture
But it’s not that easy.
After considerable study, a pair
of North Carolina agricultural
economists now say it costs more
to produce on-farm alcohol than
needed
it’s worth.
Everett Nichols and Dan
Jackson, members of the
Department of Economics and
Business at North Carolina State
University, are telling farmers in
that state that small-scale, on-
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tanu alcohol aisuliei its just aren’t
worthwhile; that at current prices
it costs a lot more to produce on
farm fuel than it does to buy it;
and, there are other problems.
Farmers are using three major
products for farm-produced fuel
ethanol, methanol and vegetable
oils. Of the three ethanol, or gram
alcohol as it’s popularly called, is
commonly considered the most
feasible.
It’s fairly easy to make, the
distillery equipment is inex
pensive, and it can be made from
almost anything that will ferment.
Corn and gram sorghum are the
two most economical feedstocks
for this process.
According to Nichols and
Jackson, the average production
costs in terms of dollars per gallon
of ethanol range from 14.22 for a
small batch still to $2.37 for a large
continuous operation unit. Those
costs mclude all charges involved
except the use of land.
By subtracting out the feed value
of the by-products left over from
the production of ethanol, the
economists have arrived at some
break-even values depending on
the kind of operation.
In their study, the economists
found all of these break-even
values were higher than the
current pnce of gasoline.
for
“None of the distilleries included
in the study can produce ethanol
cheaper than gasoline. And all are
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currently unprofitable,” the
economists say.
Even considering the direct tax
saving available to ethanol
producers in terms of investment
credit, federal and stte excise tax
exemption and income tax credit,
trotallmg about 55 cents a gallon,
ethanol production still isn’t
worthwhile. Even figuring corn at
$l.BO a bushel, far below its present
market price, they say ethanol just
can’t be produced cheaply enough.
Significant improvements in the
process will have to be made to
lower production costs or farmers
will have to find some sort of ad
ditional state or federal subsidies,
according to the economists. If
gasoline prices continue to rise,
then someday ethanol production
might seem more feasible.
But they point out when that
happens, large-scale industrial
distilleries will probably step in
and fill the market. As that hap
pens, pnces for inputs, especially
gram, will go up, eliminating the
on-farm advantage of ethanol
production. Besides that, the large
scale plants will be more efficient
and will be able to pay more for the
raw products they need.
The economists think eventually
only the most efficient firms, most
likely large-scale operations, will
be able to pay the higher input
costs and continue to earn a profit.
Small, meffficient units will be
forced to shut down.
Nichols and Jackson are ad
vising fanners to weigh all these
factors before they make
relatively large investments m
small-scale farm distilleries. They
think such operations will probably i
continue to he unprofitable even
with substantial increases m
gasoline pnces.
“Distilling alcohol is a com
plicated enterprise requiring
skilled labor to realize a profit. For
most, start-up costs are sub
stantial. With present technology,
commercial alcohol production is
more competitive than on-farm
production,’’ they conclude.
There’s another problem with
on-farm ethanol production and
that is the amount of water it
contains.
Farm-produced alcohol is
considered hydrous because of its
relatively high water content and
low proof. Because of this hydrous
ethanol, which is all fanners can
expect to produce from their on
farm systems, can’t be suc
cessfully mixed with gasoline to
make gasohol. It can only be
utilized as straight ethanol in
gasoline engines that have been
modified to burn it instead of
gasoline.
Used as a pure fuel it takes 1.7
gallons to equal the energy in one
gallon of gasoline, and that
reduces its competitiveness by a
considerable margin.
(Turn to PageEs)
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