Wisconsin Ag Connection - National/World News - USDA Releases Report on Ethanol Production in Ag Transportation

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USDA Releases Report on Ethanol Production in Ag Transportation
USAgNet - 09/24/2007

The U.S. Department of Agriculture Friday announced the publication of Expansion of U.S. Ethanol from the Agricultural Transportation Perspective, a report on ethanol transportation. This report provides an overview of transportation issues facing the U.S. ethanol industry in the context of the U.S. corn market and provides a frame of reference as more ethanol transportation information is developed.

"Rapid expansion of the ethanol industry has far-reaching implications for agricultural transportation," said Agricultural Marketing Service Administrator Lloyd Day. "Transportation is a major cost for ethanol producers and balancing these expenses with needed infrastructure can be critical to sustained profitability."

According to this report, corn use for fuel is likely to have a mixed impact on rail, truck and barge transportation, both in the shipping of corn to the ethanol plants and the shipping of ethanol to blending locations.

Currently trucks are used to ship most of the corn used by ethanol plants, but the newer and bigger ethanol plants also could use rail for inbound corn shipments. Railroads, trucks and barges transport most ethanol today from production or import locations to where it is blended with gasoline. To sustain market growth needed to meet ethanol production targets, the report concludes that infrastructure must be developed for transporting biofuels and co-products to market.

In 2005, rail was the primary transportation mode for ethanol, shipping 60 percent of ethanol production or about 2.9 billion gallons. Trucks shipped 30 percent and barges about 10 percent. The report states that, to date, the growth of ethanol production and construction and expansion of new plants have not been hampered by logistical concerns, as railroads have kept up with ethanol growth. As ethanol production grew by 26 percent, railroads' shipments of alcohols (mostly ethanol) increased by 28 percent.

Most ethanol is currently produced in the nation's heartland, but 80 percent of the U.S. population lives along its coastlines. Therefore, this initial report concludes that a number of transportation factors need to be considered as ethanol continues to expand, such as: the capacity of the nation’s transportation system to move ethanol, feedstock and co-products; the availability of feedstock to ethanol plants and the location of feedlots to relative ethanol producing areas.

USDA's Agricultural Marketing Service will continue to examine ethanol's impacts on agricultural transportation and plans to regularly issue reports about its findings as part of its weekly reporting during the coming fiscal year.