In the ethanol industry's infancy, small, locally owned plants were the way for farmers to capitalize on a booming industry.
Then, all of a sudden, Wall Street found out there was money in ethanol and jumped on board.
Today, the industry is struggling due somewhat to the global economic recession and bad gambles made by certain players. Wall Street is shying away from ethanol as it deals with its own financial turmoil.
- Financial crisis slowed inevitable consolidation phase
- Poet, ADM interested in buying troubled plants
- Only one-third may survive next few years
Speaking at the American Bankers Assn.'s Agricultural Bankers Conference in November, Mark Lakers of Agribusiness & Food Associates said as many as 40 ethanol plants could be bankrupt by early next year of the roughly 175 plants currently under construction or on line.
Logan Caldwell, president of Houston Biofuels Consultants, added that the ethanol industry "is not immune to the laws of supply and demand" as it sifts out players who are not profitable.
The biggest player, VeraSun, is already bankrupt. It owns 16 plants in the Midwest (Map).
Ian Horowitz, energy analyst for Soleil Securities Group Inc., explained that VeraSun had a "foot on the floor and became too big too fast". read more
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