Excess ethanol production capacity and reduced demand may force the U.S. ethanol industry to change its business model. According to a new CoBank report, the ethanol industry will need to diversify beyond fuel to include higher margin co-products. The COVID-19 pandemic and other factors impacted the industry in 2020 and while export growth could help reduce the excess capacity, it’s not very likely. Ethanol plants that struggle will likely close their doors or consolidate with others. In the next five years, CoBank is forecasting larger, more financially stable U.S. ethanol companies with more diversified offerings.
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