With Congress back in Washington, D.C. for the 2nd session of the 108th Congress, attention returns to the yet-unfinished comprehensive energy bill. It will come as no surprise that the Renewable Fuels Association (RFA) is continuing to press for final passage of the bill including the renewable fuels standard (RFS) fuels agreement and important ethanol tax provisions such as the Volumetric Ethanol Excise Tax Credit and modifications to the small ethanol producer tax credit.
 	
 Opportunities to pass major legislation will be scant in 2004. The presidential primary season has begun, Congress continues to work on last year's spending bills, and Members want this session to end on time so they can go home to campaign. Simply put, between the lack of legislative days and the influence of presidential politics permeating every policy discussion, there's not much hope for a productive Congress.
 	
 For these reasons, the RFA remains committed to pushing the energy bill through the Senate in the next couple of months. Passing the energy bill is the simplest and most likely way for our legislative priorities to become law.
 	
 But, if the energy bill fails to gain the support necessary to get it through the U.S. Senate, the RFA is committed to pursuing all other avenues for enacting the RFS fuels agreement and the ethanol tax provisions. It will be more difficult outside of the energy bill parameters, but the ethanol provisions continue to enjoy overwhelming support from both sides of the aisle.
 	
 Under any legislative scenario, the demand for ethanol will continue to be strong for the foreseeable future. Ethanol is now a vital coast-to-coast gasoline additive that is increasingly sought after for its clean-burning, high-octane properties. The ethanol industry will continue to work hard to be recognized as a reliable, cost-effective partner for our customers in the petroleum industry.
 	
 Our track record is envious. California, New York and Connecticut all switched from MTBE to ethanol at the end of 2003. The transition went smoothly and consumers in all three states have been pleased with the change. Ethanol producers and marketers should be rightly proud of this accomplishment. After all, these markets represent roughly 1.4 billion gallons of annual demand.
 	
 Even as we enter 2004 with the satisfaction of new markets along both coasts, the ethanol industry's goals remain clear: We must enact important tax legislation and the RFS fuels agreement; we must continue to meet our customers' demands as other states consider switching to ethanol; and, ethanol must remain a reliable gasoline blendstock from coast-to-coast. A tall order to be sure, but the ethanol industry is used to tackling challenges.
 

 
 
 Bob Dinneen
 President and CEO, 							
 Renewable Fuels Association

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A View form the Hill

In terms of energy budget items within your control to adjust, motor selection is perhaps the most obvious way to cut costs at a processing plant. 
 	
 Did you know that the annual energy cost of running a motor is many times greater than its initial purchase price? For example, at a rate of 6-cents per kilowatt-hour, a typical 20-horsepower, continuous-running motor uses almost $9,000 worth of electricity annually, about nine times its initial purchase price. 
 	
 As you can see, a small improvement in motor efficiency can dramatically reduce your energy costs. Replacing an old, standard efficiency 20-horsepower motor can immediately reduce your annual electricity cost to $8,000. 
 	
 Two common motor selection mistakes keep many industrial clients from realizing great savings in motor operation costs.
 	
 One mistake is putting too much emphasis on initial cost when selecting motors. As you can tell from the figure, the purchase cost of a motor is insignificant when compared to the costs of operating that motor over time. 
 	
 Over the past 15 years, motor efficiency has improved substantially. Today's energy efficient motors produce the same power but use less electricity due to superior construction materials and manufacturing practices. Replacing your old, pre-1993 motors with high-efficiency models results in reduced electrical operating costs of 5 percent to 15 percent, depending on motor size (small motors have the larger improvement.) With installation costs included, payback is usually achieved in less than 18 months at continuous process facilities.
 	
 You must also choose between today's standard and high-efficiency motors. High-efficiency motors typically cost 15 percent to 30 percent more than their standard counterparts, but they typically reduce your electrical operating costs by up to 3 percent. This means that replacing worn-out motors with high-efficiency motors is the prudent thing to do since the higher purchase cost will be recovered in less than six months. Depending on your facility, it may also make sense to replace functioning standard-efficiency motors as well. (Note: many utilities offer rebates as high as 15 percent on the purchase of high-efficiency motors.)
 	
 Other benefits of high-efficiency motors include reduced electrical load and the resulting system capacity, reduced peak demand utility bill values, lower noise of operation, cooler motor operation (resulting in lower HVAC costs) and longer motor life.

 	
 A second mistake is to "play it safe" and select an oversized motor. In past decades, engineers and contractors selected motors using the notion that motor life would be prolonged and failures and downtime would be minimized if motors were selected to deliver only about 2/3 of their nameplate horsepower ratings. 	What this did, however, was guarantee that not only was the motor operating very inefficiently, but it also caused the motors to operate at very lagging power factors.
 	
 Load factor is defined as the ratio of the actual amount of load a motor carries with respect to its rated full load carrying capacity. For example, if a 10-horsepower motor is operating a 4-horsepower load, it is operating at a load factor of 0.4 or 40 percent. However, motor energy efficiency is maximized at a 75 percent to 90 percent load factor and drops off dramatically below 50 percent. This means oversized motors cost you in three ways: (1) increased purchase cost, (2) increased power factor penalty charges, and, most significantly, (3) decreased operating efficiency. 
 	
 Over 40 percent of today's industrial motors are operating under 40 percent load factor. If your motors are running at levels less than 75 percent of their nameplate amps, consider a study to determine the payback on replacing this motor with a properly sized, high-efficiency motor.
 	
 An exhaustive report by the Department of Energy shows that only 15 to 22 percent of motor users are taking advantage of these significant opportunities to increase operating profits via good motor selection and sizing criteria.
 
 ASDs & VFDs
 Utilizing adjustable speed motor drives (ASDs or VFDs) can also increase your profits.
 	
 Variable torque loads such as centrifugal pumps and fans are the best candidates for energy saving VFD applications. Pumps and fans are often sized for worst-case conditions but usually operate at 30 percent of their rating. 	Traditionally, these motors are operated at full speed and control valves or air dampers are utilized to control—or block—the extra output not required by the process.
 	
 Since power requirements for variable torque loads drop off by the cube of the speed decrease, a VFD can be used to decrease the motor speed so that only the needed energy is utilized. This results in significant savings whether you are considering a new pump or fan application, or contemplating a system retrofit.

 	
 For example, a typical pump application has a 100-horsepower motor operating a centrifugal pump 24-hours per day, 365 days per year. This requires about $27,500 worth of electricity per year, at 4 cents per kilowatt-hour. If the control valve is replaced with a VFD, the pump may require only 30 horsepower to operate the pump at half speed. This results in a savings of $12,500 per year. This is a payback of less than six months, and the energy savings continue thereafter.
 	
 The following Web sites offer more information on VFDs: www.drivesmag.com and www.oit.doe.gov/bestpractices/energymatters (and do a word search for ASDs). Learn more about motor efficiency at: www.oit.doe/gov/bestpractices/motors, www.nema.org, and www.motorsmatter.org. EP 
 
 Doug Post is president of Interstates Engineering.

Maximizing Electrical Investment: The financial impact of motor selection

With throngs of project development groups vying for capital at the start of 2004, equity and debt participants simply aren't getting excited about average ethanol projects. Projects that aggressively structure and plan to be the best will move forward. The others will fade away or regroup. 
 	
 Not surprisingly, I have yet to speak with a project development group that does not plan to pick the best site, utilize the latest technology, build a state-of-the-art facility and hire competent personnel to run it. Typically, development groups put considerable focus and professional effort into utilities, plant design and construction, technology, component quality, permitting, procurement, regulatory management, personnel selection and training, safety, market development and many, many other aspects. 
 	
 Certainly, all of these things must be done—and done right—if lofty performance objectives are to be achieved. But when it comes to feedstock procurement and risk management, some projects seem to fall short.
 	
 I would submit that, once construction is completed, by default many groups are actually planning to operate their business on an "average" basis. How can this be? Is this consistent with financial success on a long-term basis? 
 	
 It is commonly understood that primary feedstock costs comprise upwards of 70 percent of plant operating expenses. It also well understood that ethanol sales account for upwards of 80 percent of total operating revenue. Most people involved in this business understand also that corn and ethanol prices are highly volatile and not correlated. They are also commodities, implying that individual participants cannot impact the price of either. Thus on a long-term basis, the key to financial survival—and the hoped-for return—lies in the interplay and management of price risk associated with the feedstock and the primary product produced. In ethanol production, this is essentially the relationship between corn prices and ethanol prices. 
 	
 I believe that most development groups generally understand these facts. I believe furthermore that most groups understand that these risks can be managed to a significant degree. Even so, many projects fail to structure to be the best in this area because they are not equipped to adequately address risk management. They fall short because they lack two, very crucial, and hard-to-acquire elements to help address this risk—working capital and execution capability. 
 	
 In this context, working capital is the lifeblood of the ethanol enterprise. It is the cash, or equivalents, that allow the business to function on a day-to-day basis. Working capital is comprised of such things as cash equity, payables and short-term lines of credit. 
 	
 Often, new ethanol enterprises generate barely enough equity investment and debt to build the physical plant, and purchase supplies, equipment and raw materials. Too often, they do not have adequate working capital to support a comprehensive risk management program. Lenders are often reluctant to provide additional credit for this activity because they're already stretched on financing the physical plant.
 	
 Beyond the working capital challenge, some plants struggle to understand the multiple types of risks they face, and the mechanisms for mitigating these risks. This is a complicated process. Simply tracking and evaluating risk is an every-day challenge. Execution involves having a means to know what to do, how much to do, what mechanism to use, when to do it, and with whom to do it, and more. Again, some projects simply have not prepared to do this in a "best of class" fashion.

 	
 Lacking the fundamental working capital and execution capability, prospective ethanol producers simply can't address the inherent volatility of the business, and manage the price risk and commodity arbitrage game—even when they know they're in it. 
 	
 Instead, they are relegated to dealing in spot markets. They assume more risk than their balance sheet can readily support, and essentially operate their business on an average basis—or maybe worse. 
 	
 In order to work around this dilemma, some plants "transfer" risk to producer stakeholders via indeterminate-price corn delivery requirements. Others seek to acquire working capital from (or shift financial risk itself to) suppliers, lenders, contractors or marketers. While this may work for a time, and to a degree, economic players are not prone to accepting risk without adequate compensation. If third-party participants are willing to accept this "risk transfer," my guess is that it is actually costing the ethanol plant more than its management team realizes. At the same time, they may be getting less effective risk mitigation as a result. 
 	
 Let's say that the combination of corn price and ethanol value, along with other revenues and projected expenses result in a projected gross margin of 30 cents per gallon. This might be a very attractive margin to lock into, particularly for a start-up operation. Let's say further that the plant has the knowledge, opportunity and wherewithal to lock in the ethanol value and hedge the corn price. Ideally, all things being equal, a plant might want to lock in as much of this as possible. However, given the demands of "rational economic players," these risks may not be hedgeable without performance assurances in the form of margins—which take working capital. Lacking adequate working capital, the plant simply can't do the right thing. 
 	
 Despite the substantial challenge, there are ways to address the issues. However, projects must first commit to putting the same high-level focus and development effort toward adequately funding and executing commodity risk mitigation as they do with other elements of their project. They must commit to understanding the issues well enough to question and evaluate prospective third-party service providers, and understand the true costs of the service. They must commit capable people on an ongoing basis to oversee the day-to-day process, communicate with stakeholders, and literally guide the process. (In my opinion, no plant should ever "turn over" their risk management process entirely to a third party.)
 	
 Here are few of my "success keys." Good luck. 
 
 -A successful ethanol plant is as much about managing price risk as it is about producing ethanol.
 -Profit is the No. 2 priority. No. 1 is to not sink the ship. 
 -Risk management is not so much a matter of corn or ethanol price, but a matter of corn and ethanol price.
 -Working capital is the fuel for effective risk management.

 -Risk management is not so much an issue of price prediction, as it is a matter of market awareness, tool selection and execution. EP
 
 Neill McKinstray is director of ethanol services for The Andersons Inc.

Should future producers commit to putting the same high-level focus and development effort toward commodity risk mitigation as they do with other elements of project development?

Buying into Risk Management

The Renewable Fuels Association (RFA) announced two recent additions to its organization this month. GATX Rail of Chicago is the largest tank car lessor in North America, providing railcars and locomotives to ship ethanol from coast to coast. Lansing Grain Company LLC in Overland Park, Kan., trades whole grains and feed ingredients, including ethanol coproducts. Lansing Grain's Risk Services Division serves the ethanol industry.
 	
 The RFA added three additional members in December. Tall Corn Ethanol LLC is the newest ethanol-producing member, operating a 45-mmgy plant near Coon Rapids, Iowa. Lincolnland Agri-Energy LLC is a future ethanol-producing member, currently constructing a 40-mmgy facility near Palestine, Ill, and the South Dakota Corn Growers Association is an ethanol-supporting member, promoting improved corn profitability through influencing public policy.

January 9 RFA welcomes new members

The Sustainable Energy Coalition (SEC) released the results of a 30-question survey of the views of the major presidential candidates on a cross-section of energy and related environmental policy issues. 
 	
 All eight respondents supported establishing a renewable fuels standard (RFS). All but one respondent supported continuing the federal tax incentives for ethanol.
 	
 The complete survey results can be found on the Environmental & Energy Study Institute Web site at www.eesi.org/publications/Press%20Releases/2004/Candidate%20Position.htm.
 	
 The RFA is a founding member of the SEC.

January 8 Presidential candidates show ethanol support

At the end of 2003, California, Connecticut and New York followed through with their pledge to ban MTBE use. The conversion to ethanol started at the beginning of 2003 for California, and the switch in New York and Connecticut took place during November and December of 2003. The change spawned debate over how the ban would affect fuel prices, but, according to those in the industry, all appears fine thus far.
 	
 "The ethanol industry really stepped up to ensure adequate and affordable supplies were available from coast to coast," RFA president Bob Dinneen said. "New plants are built and more are under construction. There should be no doubt about the ethanol industry's ability to supply any state wishing to switch from MTBE."

January 1 California, Connecticut, New York complete switch to ethanol

Representatives from the United States, El Salvador, Guatemala, Honduras and Nicaragua recently agreed to the Central American Free Trade Agreement (CAFTA), according to the RFA. 

 	
 In the past, Central American countries have been grouped with Caribbean countries under the Caribbean Basin Initiative, which created the current import rules for ethanol. The new agreement won't affect the countries' ability to sell ethanol to the U.S.
 	
 The CAFTA will be pending before Congress this year. EP

December 17 Trade agreement moves forward

A straightforward newspaper headline, "Ethanol venture to base in Wichita," broke the story when 12,000 square feet of office space in northwest Wichita became home to the industry's newest startup. It was an unusually quiet beginning to what could be one of the most-watched business ventures of the new year—in ethanol circles anyway. 

 	
 To observers, the story seemed to unfolded overnight. 
 	
 A pair of ethanol industry powerhouses, Fagen Inc. of Granite Falls, Minn., and ICM Inc. of Colwich, Kan., fused competitive subsidiaries, merging Fagen Management LLC, ICM Marketing Inc. and ICM Risk Management Inc. The deal yielded a quartet of subsidiaries under a single umbrella—United Bio Energy LLC (UBE). 
 	
 Collectively, the UBE companies offer ethanol plant general management, ethanol and distillers grains marketing, grain origination services and overall risk management for grains and energy. The team includes UBE Management LLC, UBE Trading LLC, UBE Ingredients LLC and UBE Fuels LLC. 
 	
 The formation of the company was carefully considered, yet spontaneously fashioned. 
 	
 "The concept had been developing since mid-2002," said UBE President Jeff Roskam, who still holds the title of senior vice president of ICM Inc.. "It was a direction we were moving in, but there was no real timeframe for making it happen. Once we made the decision to move forward, the whole thing took shape in less than 90 days." 
 	
 Roskam, who was previously responsible for business development at ICM and remains on the board of directors of two ethanol plants, said the common business objectives of Fagen and ICM led to the conception of UBE. 
 	
 ICM, one of the nation's leading ethanol plant process technology providers, began working on ethanol plant management contracts in 2003, to provide management services to Big River Resources in West Burlington, Iowa, and Trenton Agri Products LLC in Trenton, Neb. (both plants are still under construction). At the same time, ICM began laying the groundwork for "group purchasing"—now one of UBE Management's key selling points. The company had also launched ICM Risk Management Inc. and, more recently, an ethanol marketing group. 
 	
 Likewise, Fagen Management LLC, already a year old when it was flipped over to UBE, had signed a contract to manage Platte Valley Fuel Ethanol LLC, an ethanol plant under construction in Central City, Neb. 
 	

 Suddenly ICM and Fagen, one of the best known dry mill ethanol plant design/build teams in America, were in the same game—and playing to win. 
 	
 "With both of us getting into plant management and other parallel services, there was some concern about overlap of services and putting our customers in an uncomfortable position," Roskam said. "We agreed on the philosophy that it is better for plants to be 'independent and associated' than 'independent and isolated'—and that grind management is key to stabilizing and growing the industry." 
 	
 ICM President and CEO Dave Vander Griend and Fagen President and CEO Ron Fagen were open to the idea of creating an alliance in management and marketing services. The two company leaders, along with Roskam and Fagen Senior Vice President of Technology and Business Development Wayne Mitchell, established a dialogue that led to a deal everyone could agree on. 
 	
 "Our talks centered around the need to strengthen the industry, to offer management services that would add stability to the way ethanol plants manage—and think about—business," Roskam told EPM. "The industry is experiencing extraordinary growth, but the availability of capital is becoming more limited." 
 	
 In mid-2002, Roskam determined that the ethanol industry would need over $2 billion in debt and equity over a four-year period to build plants that were being considered at the time. 
 	
 "We saw an opportunity to grow our businesses and, at the same time, offer management that improves the long-term stability of new and existing ethanol plants—something that would bring more capital to the table," Roskam said. "With over 240 years of combined ethanol and grain processing experience, the two companies were prepared to make this commitment." 
 	
 The crux of UBE's strategy is to provide tools and resources that allow client plants to focus on the "grind margin," the fluctuating relationship between ethanol prices, distillers grains prices, corn prices and natural gas prices. 
 	
 "The idea is to always have the grind margin monitored, hedged or otherwise under close scrutiny," Roskam said. 
 	
 United Bio Energy, as its name suggests, is focused on uniting ethanol producers through group management and marketing services. The company is a small part of a much larger strategic shift towards greater industry cooperation. 

 	
 "It's a reaction to the fundamental changes in the way corn is processed in the Midwest, and it's a direct result of dry mill ethanol production," Roskam said. "We're seeing the decentralization of grain, feed and fuel processing systems. It's a huge shift, an unfolding paradigm in agriculture that will require new models of management."
 	
 The industry is also maturing and there are more—and larger—players, which means the models that worked 10 years ago need to adapt to stay competitive. Unlike the cooperative-driven "Minnesota Model" that gained widespread popularity in the late 1990s, many of the plants being built today are not dependent on corn delivery contracts from farmer-investors. The new plants are bigger—often not true co-ops—and increasingly being built on the outer fringe of the Corn Belt.
 	
 "There is a growing need to maximize bushels and minimize cost," said Randy Ives, vice president of UBE Ingredients. 
 	
 Formerly the leader of ICM Marketing Inc., Ives helped the company create a high-volume retail merchandising operation with services ranging from grain procurement, feed ingredient sales, logistics, fleet management and quality control to risk management through hedging, market forecasting, inventory management and the carrying of accounts receivable.
 	
 Today, UBE Ingredients continues all of these services, providing a customer-oriented focus on distillers grains marketing and, now more than ever, grain procurement. The company is able to handle transportation logistics, accounts receivable and credit risk assumption for its client plants.
 	
 Other than reshuffling a handful of employees into other areas of the company, ICM Marketing remains largely intact as UBE Ingredients. 
 	
 "We have 15 people on staff," Ives said. "I think we'll double that by the end of 2005. I'm interviewing people regularly and adding marketers to get the results our customers expect." 
 	
 New employees would include UBE personnel stationed at client plants managing corn procurement and distillers grains merchandising. 
 	

 The company has an original base of 650,000 tons of distillers grains on the market right now. Roskam would like to see that number grow to over 1 million tons by mid-2005. Ives said his team is up to the task. 
 	
 "I'm excited about this new company," he told EPM. "The future is brighter than ever before. Opportunity knocks." 
 	
 In addition to setting a marketing goal of 1 million tons of distillers grains by mid-2005, Roskam wants the company to represent at least 300 million gallons of ethanol, and he wants to hit the mark in the next 18 months. They represent about 130 mmgy today. 
 	
 The company has a contract to market ethanol for U.S. Energy Partners LLC in Russell, Kan., and two other contracts with plants under construction: Big River Resources LLC in West Burlington, Iowa, and Platte Valley Fuel Ethanol LLC in Central City, Neb. 
 	
 "We're very close to closing the deal on two or three more, but I probably shouldn't talk about those agreements until they're final," said Dave Dykstra, vice president of UBE Fuels. "We also deal in the wholesale business—buying ethanol on the open market, which brings another 30 million gallons a year to our portfolio."
 	
 UBE maintains customer relationships with many national and regional oil and gasoline refiners, blenders and marketers. Its service package includes assumption of credit risk and the increasingly critical transportation logistics component of ethanol marketing. 
 	
 Dykstra, a sixteen-year veteran of fuel ethanol and industrial alcohol marketing, joined ICM's Ethanol Marketing Group in April 2003 after successfully leading marketing efforts for MGP Ingredients, and later Abengoa Bioenergy Corp., for several years. 
 	
 The "biggest switch," he said, from ICM Marketing to UBE Fuels was an even greater focus on margin management services. 
 	
 "The company stressed its ability to monitor the margin in order to achieve stable earnings," he said. "It sounds easy enough but for many ethanol producers it's not. Earnings are cyclical and, as any plant manager can tell you, it can get bad—sometimes real bad—if you aren't playing your cards right." 

 	
 With dry mill ethanol plants being built to a larger scale, some as large as 100 mmgy, transportation logistics have become more complex, Dykstra told EPM. 
 	
 "With access to the BNSF Unit Trains into California and CSX into the Northeast, we can move the product at these high volumes," he said. 
 	
 UBE Management is set up to provide general management services for ethanol plants, including UBE personnel permanently employed at the plant site on a contractual basis. The company provides strategic "day-to-day" management of the plant's operations on behalf of the owner's board of directors and is responsible for profit and loss at the facility.
 	
 UBE's general management program includes the client's participation in group purchasing of enzymes, yeast and chemical supplies. The program is set up to create a substantial annual savings for the plant. It also includes the plant in a monthly benchmarking information system that provides continuous plant conversion and operational efficiency feedback for management and board members to compare its operations to those of similar plants. 
 	
 Tim Morris, vice president of UBE Management, is the only Fagen Management LLC employee to transfer over to UBE. Although he is relocating from Columbus, Neb., to Wichita, he looks forward to the opportunity. 
 	
 "It's exciting," he told EPM. "Essentially what you have is two major players coming together to form a company that is going to help bring long-term success to the industry. We really believe in what we're doing." 
 	
 Morris has over 22 years management and technical experience in process manufacturing, including technical and managerial experience at several different manufacturing facilities. In January 2003, he became project manager for new ethanol plant construction in Nebraska for Fagen Management LLC. Prior to 2003, he spent 10 years at Minnesota Corn Processors (now owned by Archer Daniels Midland Co.), and several years at Cargill Inc. and Coors Brewing Company.
 	
 Echoing Roskam's objectives, Morris said the first priority of UBE Management is to get established, build relationships, and then deliver on its pledge. 
 	

 "You'll see that happen this year," he said. 
 	
 Will UBE-managed plants be restricted to Fagen/ICM projects? 
 	
 "Not necessarily," Morris told EPM. "We are able to manage any ethanol plant, but it's a logical starting point to begin with ethanol plants that are designed and built by the Fagen/ICM team." 
 	
 Managing the grind margin is, of course, essential to the UBE Management philosophy.
 	
 "We want to make sure ethanol plants are taking steps now that will set them up for success over the long term, "We believe a business should outlive its owner. That's the attitude we have." Morris said. 
 	
 The company will take a team approach to business, almost like a franchise.
 	
 "I'm not so sure 'franchise' is the right word but, yes, there's no need to reinvent the wheel every time a new plant starts up. Morris said, "We can—and we should—learn and benefit from what we already know. We offer management and business practices that an isolated general manager simply could not develop." 
 	
 Sometimes margin management means not reaping the highest of highs in order to avoid the lowest of lows. It's a game of moderation and resolve. 
 	
 "It takes a systematic, methodical approach," Morris said.

 	
 The company is in the early stages of developing a plan to offer its client plants profit sharing opportunities, essentially allowing them to invest in UBE.
 	
 "The customer group could buy in, for example, as a value-added opportunity," Roskam told EPM. "This would allow customers to take part in the growth of the industry. It's another way to financially unite our clients." 
 	
 In addition to grind margin management, UBE would help its client plants develop streamlined operations to reduce non-commodity risks, or what Roskam calls "technical risks." Benchmarking, or "bench strength" assessments, are used to establish performance comparisons among client plants.
 	
 UBE Trading, which stemmed from the 1-year-old ICM Risk Management Inc., provides a full range of risk management services and consulting to the owners and managers of fuel ethanol plants. This includes input and output price risk management for commodities including corn and grain sorghum, energy sources such as natural gas and outputs of related products including ethanol.
 	
 "Everything at UBE ties into the trading side of the company," said Sam Weinhold, vice president of UBE Trading. "Risk management complements everything UBE offers. UBE Trading is the source of much of the margin management information our clients rely on." 
 	
 Weinhold, a licensed commodity broker, joined ICM in 2001 and was instrumental in developing the risk management concept that is being incorporated into various ethanol plants under the UBE umbrella. He served as president of ICM Risk Management Inc. since January 2003, before taking a leadership role with UBE Trading. 
 	
 "We utilize futures, options, cash markets, and over-the-counter derivatives to protect ethanol plant processing margins," Weinhold told EPM. 
 	
 Roskam believes all four subsidiaries of UBE have the potential to become leaders in their respective roles. 
 	

 "Our near-term goals are simple," he said. "We will establish ourselves as leaders with each individual business and we will stay focused on management and continuing to get the highest possible returns for our client producers." EP

With a competitive overlap in sight, Fagen Management LLC, ICM Marketing Inc. and ICM Risk Management Inc. combine resources to form United Bio Energy LLC.

United They Stand

When Morgan Stanley Capital Partners acquired Williams Bio-Energy for a bargain-like $75 million last year, Ron Miller knew what stood to be gained and lost. 
 	
 There would be no jobs eliminated, no customer relationships broken and no drastic changes to the company itself. Those assurances comforted Miller. The thought of being disconnected from Williams did not.
 	
 "Overnight, we went from being part of a giant corporation to a virtual stand-alone company," said the longtime president of the Pekin, Ill.-based ethanol producer and marketer. "Our information network was gone." 
 	

 But they weren't alone. 
 	
 The acquisition left certain temporary voids—changes of ownership always do—but Morgan Stanley Capital Partners, stepped in and helped the company recreate itself as Aventine Renewable Energy Inc. The company was able to rebuild its information network and, for the first time in years, focus on the products, employees and customers that directly affected its bottom line—its own bottom line. No longer would ethanol production be a "small potato" asset overshadowed by pipelines, petroleum and natural gas. 
 	
 "Frankly, it is the first time in 20 years that we have been really important to our owners," Miller said. "We are a priority again, and it is a nice change." 
 	
 When Morgan Stanley Capital Partners purchased Williams Bio-Energy, it bought a 100-mmgy wet mill ethanol plant in Pekin, 78 percent of a 35-mmgy dry mill ethanol plant in Aurora, Neb. (Nebraska Energy LLC), and the nation's second largest ethanol marketing alliance. 
 	
 The acquisition was perhaps the biggest changing of hands, so to speak, that the industry had ever witnessed. While the deal was finalized last February (it was actually made official with the name change in May), the acquisition had been in the works for months, with talks beginning as far back as the summer of 2002. In fact, Williams had been considering a sale since 2001. 
 	
 "Williams had actually been looking for a buyer since mid-2001, even before 9/11," Miller said. "In late 2001 the company began selling assets. They initially let go of much larger assets—pipelines, refineries, retail and natural gas subsidiaries. Because of our small size, we slid down the priority curve and it took almost a year before a buyer was identified." 
 	
 That buyer was Morgan Stanley Capital Partners, the main "fund" of Morgan Stanley Private Equity. 
 	
 Since its founding 17 years ago, various Morgan Stanley Private Equity funds have invested capital across a broad range of industries including telecommunications, technology, financial services and healthcare. The company consists of three groups: Capital Partners, Venture Partners and Emerging Markets.
 	
 "They look for investment opportunities, and that's how they view Aventine—as an investment." Miller said. "In fact, they'll want to exit the business at some point. That's why growth is so important to this company."

 	
 Why invest in ethanol? 
 	
 "They bought the company because they saw a favorable political environment and a very attractive growth curve," Miller said.
 	
 Today, Miller reports to an eight-person board of directors, a well-rounded group that, in addition to Miller, includes four current employees of Morgan Stanley Capital Partners and three experienced advisors. 
 	
 "They're asking questions that our owners before had never asked," Miller said. "They appreciate the idea of efficiency—doing more with less. Not less employees but, for example, less inventory. We're always doing what we can to reduce costs."
 	
 From the beginning, Morgan Stanley expressed confidence in management's ability to perform.
 	
 "We were light at the top before the acquisition," Miller said, explaining how the company had reorganized for efficiency and growth in 2000. 
 	
 "We continuously look for opportunities to become more streamlined," he said. "This industry is too volatile to carry excess weight. We're pretty thin at the top now, and that's the way we want it. We have Jim (Redding) running marketing, Jerry Weiland running the wet mill here in Pekin and Tom Kell running the dry mill in Nebraska." 
 	
 During the lengthy acquisition period, however, employees in the plant were perhaps less certain of what the outcome would bring. Miller, who had to maintain confidentiality about the acquisition, did his best to address the looming ownership change. 
 	

 "A sale always brings uncertainty," he said. "You naturally do your best to address that uncertainty head on. Morgan Stanley made it clear early on that they were not in the business of producing ethanol; they were coming in to create value. So we were confident that they would choose to work with us.
 	
 "Nothing really changed. Everybody was offered positions. We had to communicate this to employees during the transition to quell rumors. We balanced the needs of the employees while maintaining confidentiality during the sensitive sales negotiation process." 
 	
 In the end, Miller said, the outcome was good for everyone, and Aventine's 250 employees kept working. 
 	
 Aventine has substantial ethanol marketing infrastructure, with a 50-terminal market system that includes the Magellan (formerly Williams) Pipeline. The company markets over 500 mmgy and wants to reach 700 mmgy by 2006. 
 	
 "We market 135 million equity gallons a year," said Jim Redding, Aventine's vice president of marketing. "You can bet we're going to achieve the best selling price when we have that much skin in the game. What we offer our alliance partners is peace of mind. They know we have a vested interest in getting the best possible returns." 
 	
 Like Miller, Redding has been with the company for more than 20 years.
 	
 "I've seen a lot of changes in the last two decades," Redding said. When I came into this business, the industry was producing about 400 million gallons of ethanol a year. From the oil embargo to the Clean Air Act to the energy bill we're looking at now, I can't tell you how far we've come." 
 	
 Redding, who started working for the company when it was owned by Texaco/CPC, is responsible for making sure every product produced by Aventine, from ethanol to corn gluten feed, finds a market. 
 	
 "I basically run the cash portion of the machine—everything outside the fence," he told EPM. 

 	
 Now pursuing new marketing contracts as aggressively as ever, Aventine's ethanol marketing group, which includes a small team of marketers in South Dakota, has a 17 percent U.S. market share. 
 	
 "Our goal is to reach 20 to 25 percent," Redding said. 
 	
 Aventine's current alliance partners include Ace Ethanol LLC in Stanley, Wis., Adkins Energy LLC in Lena, Ill., Agri-Energy LLC in Luverne, Minn., Glacial Lakes Energy LLC in Watertown, S.D., Heartland Grain Fuels LP in Aberdeen, S.D., Heartland Grain Fuels LP in Huron, S.D., Nebraska Energy LLC in Aurora, Neb., Quad County Corn Processors LLC in Galva, Iowa, Reeve Agri-Energy LLC in Garden City, Kan., Tri-State Ethanol Company LLC in Rosholt, S.D., and Aventine Renewable Energy in Pekin, Ill. 
 	
 Aventine's marketing division has a "profit and loss" focus, for itself and for its alliance partners. 
 	
 "We're in this to make money, just like our alliance partners" Miller said. "We're out there to maximize net backs over the long haul. We're looking for the best returns possible. Period." 
 	
 Redding added, "We have earned a reputation a supplier of choice. And our goal is to make ethanol marketing a non-event for our alliance partners. We want the producers we represent to think about ethanol marketing as something that just gets done—it should be hassle-free." 
 	
 Aventine's Pekin wet mill, unlike similar plants run by Archer Daniels Midland Co. (ADM), Cargill and A.E. Staley, does not have "swing capacity," the ability to produce high fructose corn syrup (HFCS) instead of ethanol. 
 	
 "Being locked into ethanol makes things simple, and we consider it an advantage, Redding told EPM. "One hundred percent of our grind is dedicated to ethanol production. It's our core product."
 	

 The other products produced at the Pekin facility include germ, corn gluten meal, corn gluten feed, corn condensed distillers solubles (CCDS), ethanol, industrial alcohol (or grain neutral spirits-GNS), dried brewers yeast and carbon dioxide (through off-take agreements).
 	
 The wet mill products are valuable but, according to both Miller and Redding, dry mill ethanol plants make more economic sense in today's capital-thin market. 
 	
 "Are we glad we have a wet mill? Yes," Miller said. "Would we build a new green field wet mill ethanol plant today? No, probably not. Dry mills are clearly the way to go in terms of building with less capital." 
 	
 With a wet mill, of course, the coproduct credit return is greater. As opposed to a 33 percent to 35 percent credit return achieved with a dry mill, Miller said, wet mill coproducts typically produce returns in the high 40-percent range, sometimes upwards of 50 percent.
 	
 Still, it's an expensive venture. 
 	
 "To build a wet mill today on a green field site would, in my opinion, require too much capital—something over $2 per gallon of capacity—compared to $1.10 to $1.40 per gallon for a dry mill ethanol plant," Miller said. "However, it probably still makes sense to retrofit an existing wet mill with an ethanol plant."
 	
 Expanding is an option too. 
 	
 In fact, Miller said Aventine plans to eventually expand its existing facility in Pekin. 
 	
 "We're already examining the possibilities. In my view, its not if, but when," he said. "We will also look at acquiring additional plants. We will make new alliance partners and continue to purchase on the retail side as we strive to achieve a 20 to 25 percent market share." EP

After less than a year under new ownership, Aventine Renewable Energy is proving to be a valuable investment for Morgan Stanley Capital Partners.

Great Adaptions

The last couple of weeks have been quite interesting—mad cows, mid-week holidays, the Euro at all time highs versus the dollar and oscillating natural gas costs. When national news leads off with stories that directly impact your product, you know that prices are going to be changing a lot quicker than normal. With mad cow fears fueling the Chicago Board of Trade (CBOT), and talk of meat and bone meal being pulled as a feed supply, vegetable proteins are in demand.

 	
 As of the middle of January, prices delivered West Coast have traded down from $160 to $155 at the beginning of the month to $140 - $145 at the time this article went to press. Residual tightness from the holidays kept the market firm into the new year, which was met with decreasing demand and available cars that had previously been difficult to find. However, with the run up in the CBOT, prices stabilized and were bid up $10 f.o.b West Coast to $138 for the summer position.
 	
 Going ahead, the futures floors in Chicago are going to dictate what happens for most products. Soy and corn futures will influence DDGS prices, and the strength or weakness of the dollar will directly impact the demand from Europe. Ocean shipping costs are becoming prohibitively high, prices have gone up 20 percent since the beginning of November and the end is not yet in sight. EP

National headlines deliver quick price changes

As U.S. ethanol production capacity tops 3 billion gallons per year, the industry is faced with what could be described as a paradox of rising proportions.
 	
 That is, America's door to tariff-free ethanol imports is opening a little wider with each new gallon of ethanol produced, sold and consumed domestically. In fact, every 40-mmgy ethanol plant that breaks ground in the Midwest opens a window for 2.8 million gallons of imported ethanol to enter U.S. borders through the Caribbean Basin Initiative (CBI). 
 	
 It's ironic, but true. And the CBI isn't the only trade policy U.S. ethanol producers—and more importantly future ethanol producers—are keeping an eye on. 
 	
 CBI imports alone could someday meet half of California's annual market demand, while the Central American Free Trade Agreement (CAFTA) brings international validity to U.S. pacts with Honduras, Nicaragua, El Salvador and Guatemala—all potential ethanol producers. The North American Free Trade Agreement (NAFTA) welcomes tariff-free ethanol imports from Canada and Mexico and the embattled Free Trade Agreement of the Americas (FTAA) proposal even threatens to remove trade barriers with Brazil someday. 
 	
 There's no need to sound the alarms just yet, though. 
 	
 CBI imports accounted for nearly every drop of ethanol imported into the United States last year but struggled to deliver just 65 million gallons, 70 percent of which went to California. At current volumes, CBI imports are not raising a stir with U.S. producers. 
 	
 "To my knowledge, the volume brought into the United States right now is not large enough to ruffle anyone's feathers," one trade analyst told EPM, putting the situation into perspective. "Ten years from now, when the CBI's cap is 350 million gallons [per year], we might be discussing a completely different story." 
 	

 Furthermore, the same trade analyst said, the proportionality of CBI imports in comparison to U.S. consumption will stay relatively fixed over time. The CBI currently allows member nations to match 7 percent of U.S. consumption (based on figures from the previous year). 
 	
 "As long as the percentage is fixed at 7 percent, there's not much to worry about," he said. "In addition, there have been proponents at the state level, California specifically, who have argued that replacing MTBE with ethanol might lead to fuel shortages and price spikes. If anything, more CBI imports would help alleviate that situation and make it harder for opponents to raise complaints about supply uncertainties." 
 	
 In all, 27 nations, including Jamaica, Costa Rica, El Salvador, Ecuador and Bolivia, make up the CBI region. The agreement allows ethanol into the United States free of the established 54-cent-per-gallon U.S. tariff normally levied on the alternative fuel. 
 	
 The CBI, and its later incarnation as the Caribbean Basin Economic Recovery Act (CBERA), is a Regan-era program that promotes the economic development of the region by providing tariff exemptions on custom duties for hundreds of products, including ethanol. The agreement, which originally went into effect in 1984, had a planned duration of 12 years. It was later modified through the CBI II in 1990, solidifying the original agreement for another decade. The United States renewed its commitment to the policy in 2000.
 	
 CBI ethanol production primarily relies on hydrous ethanol from Brazil and surplus wine alcohol from France, Italy, Spain and other Mediterranean countries. 
 	
 "It's an unpredictable business of extremely tight margins," said one company president with ties to Caribbean ethanol plants.
 	
 Both Brazilian ethanol and European wine alcohol are susceptible to a variety of factors, including falloff in availability, price fluctuations, trade regulations, currency movements and freight rates. These factors make CBI ethanol production viable only when U.S. prices rise above $1.25 per gallon. 
 	 
 Making matters more difficult for CBI producers, the availability of European surplus wine alcohol has diminished since the World Trade Organization (WTO) placed limitations on export subsidies that it considers "trade distorting," a U.S. trade official told EPM. Furthermore, Europe's wine alcohol surpluses are—and this is apparently is debatable—"shrinking" and have found new markets in Spain and Sweden (where it is reportedly used to fuel a small fleet of busses). 
 	
 During the 1980s excessive production left European countries with what international observers called "wine lakes." Eventually, millions of gallons of wine alcohol found its way across the Atlantic to ethanol conversion plants in the Caribbean. The rest, as they say, is history. 

 
 Hydrous ethanol generally accepted as feedstock 
 EPM was unable to trace the origin of the U.S. government's acceptance of hydrous ethanol, which contains 5 percent water, as a CBI-qualifying feedstock for ethanol production. The rules of origin state that CBI products must originate in the Caribbean or undergo "substantial transformation" from one major tariff line to another, an EPM source said. 
 	
 The inclusion of hydrous ethanol has long been a subject of debate. 
 	
 "The debate over what is and what is not 'substantial transformation' goes back 20 years," said the company president EPM spoke to. "U.S. producers argued that removing water from hydrous ethanol did not meet CBI criteria. Caribbean producers argued that it did. Eventually, a settlement was reached, which left us with the policies in place today." 
 
 Full-fermentation producers can maximize CBI imports 
 In addition to the volume of CBI ethanol allowed to be imported into the United States via "substantial transformation" of European and Brazilian feedstock, the CBI allows for higher levels of "full fermentation" process ethanol derived from indigenous feedstock. This market would perhaps be spurred by very low molasses or sugar prices, according to an EPM source associated with a Jamaican ethanol plant. 
 	
 Most analysts believe there is sufficient land available for sugar cane production in some CBI nations but insufficient economic potential to spur sugar cane planting for ethanol production. Reportedly, Guatemala, Nicaragua and the Dominican Republic have the potential to support indigenous production but have not done so. 
 	
 In fact, there is considerable room for growth under the "indigenous production" definition of the CBI, which places no U.S. import cap on ethanol made from indigenous Caribbean feedstock, according to an October 2003 California Energy Commission (CEC) report entitled, "Ethanol Supply Outlook for California." 
 	
 "While there appears to be only very limited plans for indigenous production. . . at present, the potential is being evaluated in a number of [CBI] countries and is. . . substantial," the report stated. 

 	
 This year, with no indigenous Caribbean production facilities on line and only one expansion project complete, the CEC expects about 100 mmgy to be imported under the CBI, with just 50 mmgy destined for the vast 900-mmgy California market. However, plans for new or revived full-fermentation ethanol plants in Panama, Costa Rica and Trinidad-Tobago could double CBI imports in the years ahead, according to the CEC report. 
 
 Four CBI producers
 There are, according to the CEC, four active CBI ethanol rectification/dehydration facilities, including two in Jamaica, one in Costa Rica and one in El Salvador. Interestingly, the CEC concluded, the limiting factor of CBI ethanol imports to California is low production capacity.
 	
 In Jamaica, Petrojam Ethanol Ltd., in some relationship with ED&F Man, operates a 20-mmgy dehydration plant, exporting fuel ethanol to the United States under CBI provisions. ED&F Man also operates its own 20-mmgy ethanol plant on the island, according to industry documents. In Costa Rica, a company called LAICA operates a 20-mmgy ethanol plant, and in El Salvador, another company (unable to be identified for this report) reportedly runs a 10-mmgy facility. 
 	
 Ethanol was produced for export by Petrojam for the first time in 1985 but, according to Petrojam's Web site, the first CBI ethanol plant was established in the early 1980s by U.S.-based Tropicana. Representing an investment of about $23 million, the plant was easily the largest investment that had entered Jamaica or the Caribbean under the CBI until as late as 1987. 
 	
 From what EPM was able to ascertain, Petrojam's operations have historically consisted of procuring low-cost wine alcohol feedstock from France, Spain, Italy, Portugal and Greece. Feedstock purchases have also been made from India and Brazil, according to online company statements. 
 	

 The rectification of the alcohol—removing waste components including solids, methanol and higher alcohols—is the first production step for most CBI producers. One technology provider described wine alcohol from Europe as a "nasty feedstock—bottom of the barrel stuff—that requires sophisticated separation technologies."
 	
 Dehydration in Jamaica (formerly accomplished by azeotropic distillation, and more recently by the more advanced and environmentally-friendly molecular sieve technology), along with denaturing, completes the process and prepares the product for export to the United States. 
 	
 U.S. regulations require CBI ethanol to be marketed through a U.S. agent. In the case of Petrojam, marketing was done previously through International Alcohols Limited (IAL), then through ED&F Man, and more recently through Moloco Inc., for sales to Murex Inc. in the United States, according to Petrojam's online company records.
 
 CBI's potential for growth
 Acknowledging that the state's fuel supply has included ethanol deliveries via marine tankers from the Caribbean, on an irregular basis for several decades, the CEC report stated, "Shipments of imported ethanol are contributing to the state's ethanol supply, and there are increasing prospects for foreign sources of supply to the state in the future." 
 	
 Worldwide, most ethanol is consumed inside the nations that produce it. However, the situation appears destined for change as more nations support ethanol production and "the benefits of international trade become realized," the CEC report stated. 
 	
 Officials have noted that CBI volume share—the 7 percent cap—has never been fully realized. For example, in 2003, CBI imports were estimated at 65 million gallons, just 3 percent of total U.S. consumption. That was up from 45 million gallons in 2002. 
 	
 "There is room to considerably increase tariff-free imports," the CEC report determined, stating that the cap, currently at about 150 mmgy, could increase to 350 mmgy under the production goals of the pending U.S. renewable fuels standard (RFS).

 	
 However, several prohibitive factors to CBI ethanol production exist. 
 	
 "Many of these countries have no oil, natural gas or coal," said the president of one engineering firm close to several CBI projects. "There are always companies looking at the Caribbean Basin for the opportunity it represents—some folks have done very well there—but getting into the game is difficult. Permitting is often a huge challenge. Energy is a constant problem and fresh water is typically scarce." 
 	
 Add fluctuating feedstock availability and WTO restrictions to those limitations and the Caribbean Basin starts to look like a risky place to build an ethanol plant. 
 
 Other trade agreements
 Beyond CBI ethanol imports, additional opportunities exist for tariff-free ethanol imports into the United States through NAFTA and the Andean Trade Preferences Pact. 
 	
 Through NAFTA, both Canada and Mexico can avoid U.S. tariffs. In fact, Canada is in the midst of a nationwide ethanol expansion program. However, aside from small shipments to the Northwest United States, Canada has sent few gallons south. Mexican ethanol production has been under evaluation for some time but there are no projects under development there currently.
 	
 Under the Andean Trade Preferences Pact, Peru, Bolivia, Colombia, Venezuela and Ecuador could also avoid the U.S. ethanol duty. The pact grants preferential tariff status in exchange for efforts to fight narcotics production. Thus far, none of these countries has become a significant producer of ethanol, but the potential exists, according to the CEC. 
 	
 In fact, a proposed state-sponsored project in Peru is reportedly planning to build a giant 200-mmgy ethanol system made up of several distilleries located along an extensive $100 million ethanol pipeline. Peru's target market: California. 
 	

 In mid-January, India's Praj Industries Ltd. announced that it signed a contract to set up two green field ethanol plants in Colombia. The contract is reportedly with one of Colombia's largest sugar conglomerates, Groupo Ardila Lulle, and attracted the attention of companies in Brazil and Europe. If built, the Colombian plants would be designed to operate on cane molasses and cane juice. The company said ethanol produced at the plants would be exported to the United States. 
 	
 Other countries that may be eligible for tariff-free importation of ethanol into the United States include what are referred to as the "Least Developed Countries," a group of 49 African, Asian and South Pacific nations. In October, a Brazilian company announced its intentions to build a large-scale ethanol plant in Angola. 
 	
 CAFTA, recently accepted by the United States, Honduras, Nicaragua, El Salvador and Guatemala, overlaps with CBI provisions in terms of opening up trade with Caribbean Basin nations. The new agreement will not further impact the ability of CBI member nations to export ethanol to the United States, according to the Renewable Fuels Association, because CAFTA does not modify existing CBI agreements. CAFTA will be pending before Congress in 2004 (probably this summer EPM learned) and must be ratified by the U.S. House and Senate.
 	
 Several major agriculture interest groups oppose the policy. 
 	
 "The sugar industry is upset about CAFTA because it will likely increase sugar imports to the United States," an industry trade analyst told EPM. "That also means that quick, easy sugar imports will steer would-be ethanol producers away from building plants in those countires. They're not going to build ethanol plants and convert sugar into ethanol when they can simply ship the sugar." 
 	
 A major threat to U.S. producers is, of course, Brazil, the world's top producer of ethanol. With over 4 billion gallons per year of production capacity, Brazil unquestionably has an interest in supplying the California market. However, even as very low-cost producers, Brazilians could not compete with U.S. ethanol prices after paying the 54-cent-per-gallon tariff. Thus, Brazil appears resigned to importing its product to the United States under the limited conditions of the CBI. 
 	
 However, some trade analysts believe Brazil could potentially start importing ethanol into the United States duty-free under the proposed FTAA. The FTAA is a decade-old international effort to unite the economies of the Americas into a single free trade area in which barriers to trade and investment would be progressively eliminated. The controversial plan, however, has not been accepted and would face the intense scrutiny of Congress and a broad range of U.S. interest groups. An EPM source close to the trade talks said that if FTAA is accepted, there will be immediate resistance to duty free ethanol imports from Brazil.
 	
 "If the FTAA is accepted, Brazilian ethanol becomes an immediate concern," an EPM source said. 
 	
 Compounding matters, the Office of the U.S. Trade Representative has a stated policy of working toward "open markets abroad" and "at home." 

 	
 "That means eliminating export subsidies, reducing tariffs and monitoring domestic subsidy programs," one trade representative told EPM. 
 	
 Meanwhile, nations around the world, from Thailand to China to Australia, are developing ethanol production programs. Most of these nations are building infrastructure for domestic usage, but some are also exploring export markets. There are outlet markets developing, too, as Japan is becoming an increasingly significant importer of ethanol.
 	
 How do all these international developments affect trade? 
 	
 "In the longer term, it appears that ethanol will become an increasingly-traded international energy commodity, accompanied by international commodity exchange postings and transactions among more supplying and consuming countries," the CEC report concluded. 
 	
 In the words of the trade official who spoke to EPM, "CAFTA and the CBI might not affect the U.S. ethanol industry that much today, but international trade will be a much bigger deal in the near future. The ethanol industry probably needs to start preparing for that." EP 
 
 The author of this article, EPM Managing Editor Tom Bryan, interviewed several expert sources for this article. However, many of contacts (all but one) requested anonymity, choosing not to be identified by name, company or agency. In the order of fairness, EPM made the eventual decision to keep the names of all sources in this article confidential.

With ethanol production on the rise worldwide, and increasing international pressure to eliminate trade barriers, how much imported ethanol will enter the United States in the years ahead?

Entering Tariff-Free

Ethanol supporters and DDGS customers may be interested in the data Jerry Shurson and fellow researchers at the University of Minnesota are gathering. Currently, three projects are underway: 1) spray-dried DDGS ingredients as antiobiotic replacements in baby pig feeds, 2) DDGS with and without phytase to reduce swine manure phosphorus, and 3) comparing the nutritional value of United States corn DDGS with Canadian wheat DDGS sources and wheat and barley DDGS from Spain. 
 As for improving baby pig feed, Shurson told EPM that researchers have developed three new distillers coproducts, which are being evaluated to determine the effects on growth performance, intestinal heath and immune system in baby pigs.
 	
 "There is considerable interest in the commercial feed industry to find acceptable replacements for growth-promoting levels of antimicrobials and animal protein supplements," Shurson said.
 	
 DDGS is also being altered in order to reduce phosphorus in swine manure. Previous research results have shown that phosphorus availability in "new generation" DDGS and corn is much higher than previously reported. Shurson's group suspects the fermentation process in dry mill ethanol plants converts a high amount of phytic acid, an unavailable form of phosphorus in corn, to a form more easily digested and absorbed by the swine.
 	

 Since phosphorus is the third most expensive nutrient provided in swine diets, researchers could benefit pigs by formulating their diets on an available phosphorus basis. Removing a significant amount of dicalcium phosphate, an inorganic phosphorus supplement, could reduce diet cost while reducing phosphorus excretion in manure.
 	
 Shurson is also involved in a comparison of DDGS sources around the world, spurred by the question, "How does 'new generation' corn DDGS compare to the DDGS produced or available within a given country?"
 	
 To answer that question, researchers are in the process of collecting wheat and barley DDGS samples from ethanol plants in Canada and Spain. Those samples will be compared to the nutrient content of corn DDGS from dry-mill ethanol plants in Minnesota, South Dakota, North Dakota and Iowa.
 	
 The idea is to develop a database of nutrient profiles of DDGS from various sources around the world so that prospective importers of new generation DDGS can make more informed decisions when assessing the value and choosing the source they want to purchase from.
 ~Staff Report

New year brings more DDGS research at University of Minnesota

MGP Ingredients Inc. started to produce finished alcohol at its Atchison ethanol facility in early December, according to spokesman Steve Pickman. The plant's distillery was damaged in an explosion in Sept. 2002, and unfinished alcohol had been shipped to a Pekin, Ill., facility for finishing since then. Pickman said the reconstruction was completed a month ahead of schedule. Burns & McDonnell of Kansas City, Mo., was the general contractor on the project

Atchison plant up to full production

Intrepid Technology and Resources Inc., a renewable energy company, recently received $147,000 from various environmental organizations, academia and others, according to Intrepid spokesman Stephen Ellis. Intrepid also received $680,000 in November. Ellis told EPM the most recent funds went directly to the Wendell (Idaho) Renewable Energy Field, where waste byproducts are converted to methane gas through anaerobic digestion. The gas is then used to power anything from microturbines to gasoline-fired vehicles, Ellis said.  EP

Intrepid receives additional contract awards

By the end of January, Greater Ohio Ethanol will choose from three brown field sites within the state for a 54-mmgy ethanol plant, according to company cofounder Greg Kruger. Kruger told EPM that Greater Ohio Ethanol is making significant progress on its equity drive and is targeting July 2004 for a groundbreaking ceremony. In addition, the company plans to build a total of seven 54-mmgy dry mill ethanol plants around the United States. Interested parties should contact Greater Ohio Ethanol at (419) 331-2676 or www.
 go-ethanol.com

Greater Ohio Ethanol to pick plant site

On Dec. 4, representatives from the University of Kansas "flipped a switch" and injected the first dose of carbon dioxide (CO2) into the ground with the hopes that it will force valuable oil deposits to the surface.
 	
 The purpose of the Enhanced Oil Recovery (EOR) Demonstration Project, located at the Hall-Gurney Oil Field outside of Russell, Kan., is to determine the technical and economic feasibility of CO2 miscible flooding. The project aims to develop reservoir data to facilitate future commercial CO2 floods and to gain an understanding of the operations and costs involved in implementing a CO2 flood.
 	
 The project is the first to use CO2 produced in an ethanol plant. U.S. Energy Partners supplied 18 tons of the ethanol coproduct for the first injection. 
 	
 When forced into a depleted oil reservoir, CO2 "strips" the unrecoverable oil from the rock formation and pushes it to nearby wells to be pumped to the surface. The CO2 flooding is expected to last about five years and, if successful, recover approximately 20,000 barrels of oil. According to Martin Dubois, a research geologist at the University of Kansas, it will take approximately two years before researchers can determine if the flooding works effectively. 
 	
 The demonstration project isn't the first of its kind, Dubois told EPM. Similar methods are being used in Texas oil fields among other places. However, their CO2 comes from natural deposits underground or the industrial market.

 	
 For more information about the project, visit www.kgs.ku.edu/CO2/index.html.
 ~Staff Report

Carbon Dioxide Enhanced Oil Recovery project begins

The 2004-2005 Fuel Ethanol Industry Directory will be making its way to offices and ethanol supporters in June 2004. Listings and advertising are currently being collected for the publication. To be a part of this valuable resource, visit www.
 ethanolindustrydirectory.com for sign-up, advertising and purchase information.
 	
 The Industry Directory is a comprehensive list of ethanol associations, engineers, suppliers, producers, researchers and government agencies, among other categories. This year's version will include expanded industry categories, as well as a digital copy of the directory on CD. It will also have an alphabetical index in addition to the listings by category and a map of ethanol plants that are currently producing and under construction.
 	
 "With the digital version, you can download it onto your computer for a quick reference," said Joe Bryan, director of publications and biofuels recruiting at BBI International. "We want to make this directory as practical as possible for all people in the ethanol industry."
 	
 Advertising deadlines are Apr. 1, 2004. The first copies of the directory will be distributed at the 20th Anniversary International Fuel Ethanol Workshop and Tradeshow in Madison, Wis. EP

Sign-up has begun for Fuel Ethanol Industry Directory

T.E. Ibberson Company has been given the Associated Builders and Contractors Inc. (ABC) 2003 National Safety Excellence Award for demonstrating the best safety practices, the highest safety standards and a history of flawless safety programs and performance.
 	
 ABC's national office in Hopkins, Minn., designed the Safety Training and Evaluation Process (STEP) program, which leads to the selection of the award recipients, to help contractors reach a higher level of safety. The STEP application process considers work-related catastrophes, the amount of work time lost because of injuries, federal or state citations issued to the contractor, safety training and employee participation in safety and health programs, among other factors. EP

T.E. Ibberson earns national safety award

VeraSun Energy Corporation announced Bruce Jamerson as its president and chief financial officer and a member of the company's Board of Directors on Dec. 11. Jamerson brings more than 20 years of investment banking and corporate finance experience to VeraSun. Jamerson, most recently the president of Conifer Investments LLC, has served as VeraSun's financial advisor since its formation. He led the team that secured funding for the construction and start-up of VeraSun's ethanol plant in Aurora, S.D.  EP

VeraSun Energy names Jamerson as president, CFO

Timothy Swanson recently joined ICM as a principal scientist in the R&D Department. He brings with him over 25 years experience in the grain processing industry. Swanson has industry experience with companies such as Dow Chemical Company, Novozymes North America, Amstar Corporation, Gist-brocades and Minnesota Corn Processors.  EP

ICM names Swanson to R&D team

Brian Boynton joined ICM's newly formed R&D team in November 2003 as a principal scientist. In this role, Boynton will be focusing on bringing new technologies and process improvements to the existing dry mill ethanol process as well as incorporating novel, value-added coproduct technologies. Over the 15 years of his career, Boynton has performed basic research, process development, scale-up and technology transfer as a direct hire or in a consulting role for several companies.  EP

Boynton joins ICM

Natural gas prices remain high by historical standards. The February 2004 NYMEX futures contract has been trading at levels over $7 per MMBtu, higher than the actual front month settlement price for all but two months over the last 10 years. 

 	
 As we look forward, are prices likely to stay high or drop down to more normal historic levels? In asking that question, it should be noted that the average gas price over the past five years is $3.85 per MMBtu. 
 	
 Predicting natural gas prices is fraught with danger, particularly with the chaos that has entered into the energy marketplace over the past few years. The "chaos factors" include, for example, the Iraq war and increased concerns regarding security of supply, the demise of the four largest natural gas marketers (Enron, Dynegy, Mirant, Aquila) and the unprecedented increase in natural gas fired electric generation. All of these factors tend to support high and volatile natural gas prices. However, we do see some glimmers of hope that natural gas prices may soften and possibly return to more normal historic levels. 
 	
 First, over the past four years (through 2002), U.S. natural gas reserves have increased. That means for each of those years, more gas was found than was produced and used. Second, natural gas drilling activity remains very strong. We have maintained a drilling activity level above the long-term trend line since May 2003. Third, the interstate pipeline industry has been aggressively investing in new pipeline projects to bring natural gas out of prolific drilling areas (i.e. Rockies) that have had insufficient pipeline capacity. Fourth, several projects are in various stages of development to bring significant volumes of liquefied natural gas (LNG) from the Caribbean and Middle East to the U.S. Finally, some sectors of the economy are permanently reducing natural gas usage. For example, several domestic ammonia fertilizer plants, which use a considerable amount of natural gas, have shut down and the production is being replaced by imports.
 	
 What's the bottom line? Price will remain very volatile with strong factors supporting relatively high prices; however, the market appears to be responding to these high prices by increasing supply and reducing demand. The key to managing price exposure will be to hedge when prices are below the long-term trend line and have the discipline to stay out of the market when prices are above the long-term trend line. Incidentally, prices are currently above the long-term trend line. EP

Healthy reserves, active drilling, new investment offer 'glimmers of hope'

The January USDA report yielded a surprise to the entire corn market on January 12. To sum it up quickly, a bullish report was released as supply was slashed and demand was heightened.
 
 The USDA reduced both planted and harvested corn acres. Harvested acres were placed at 71.1 million acres with an average yield reduced by one bushel per acre to 142.2. Total U.S. corn production was placed at 10.1 billion bushels, a reduction of 168 million bushels from the December estimate and 1.1 billion bushels less than a year ago.
 	
 Not only did changes accompany the supply side of the equation, but changes occurred to the demand side of the equation, too. U.S. corn exports were increased by 50 million bushels due to a decrease in exports from China and Argentina and overall increased global demand. Moreover, projections increased for the livestock feed sector by 75 million bushels to settle at 5.8 billion bushels. The Food, Seed and Industrial Sector consumption increased with more demand expected from the ethanol and sweetener's manufacturing industries. This sector is projected to consume 30 more million bushels than previously expected. Consumption now placed at 2.5 billion bushels is up 134 million bushels from a year ago. Total ethanol consumption is intended to consume 1.1 billion bushels. 
 	
 With total supply at 11.2 billion bushels (production plus carry-out) and demand expectations of 10.2 billion bushels, ending stocks were slashed to 981 million bushels versus 1.299 billion bushels estimated in December and 1.087 billion bushels a year ago.
 	
 World corn ending stocks decreased by 6.75 million metric tons (mmt) to 67.49. China remains the big unknown with corn ending stocks of 19.5 mmt. Currently, the USDA has placed China exports at 8.0 mmt, down 0.5 mmt from the last projection. Other production changes came with a decrease in Argentina's corn production figure. The USDA projects production at 1.0 mmt less than the previous 13.5 mmt. In addition, Argentina exports were decreased by 1.0 mmt to 8.5 mmt. EP

Corn demand rises, supplies fall in 'bullish' market

Suncor Energy Products has announced its desire to renew and expand community consultations on its proposed ethanol plant project near Sarnia, Ontario, according to Suncor spokesman Neil Levine.
 	
 "We want to keep the community informed on what we're doing," Levine told EPM in early January. "We'll hold a series of open house meetings to explain what we are going to do. This will be a time they can address their concerns. We want to hear from them."
 	
 The meetings, which would take place over the next few months, will involve the Sarnia community in project planning and help identify issues that could be addressed before Suncor makes its final decision.
 	
 The $120 million facility would produce 200 million liters (52.8 million gallons) of ethanol per year. Sites in the Sarnia area are being reviewed as the company continues to work on preliminary engineering plans.

 	
 Suncor has applied to Natural Resources Canada for funding the proposed ethanol facility under the federal government's ethanol program. The company expects to hear a reply at the end of January. 
 	
 If Suncor does receive final approval, construction could begin by mid-2004 and be finished by mid-2006. The company is already planning to use thermal oxidizer technology, which reduces emissions and odors from the plant.
 	
 The ethanol would be blended into gasoline sold at Sunoco retail stations owned by Suncor. Sunoco is the only major gasoline retailer to sell ethanol-blended gasoline in Ontario and one of few retailers in Canada.
 	
 Suncor Energy Products has a network of more than 300 Sunoco retail and Fleet Fuel cardlock sites and a 50 percent share in over 200 Pioneer and UPI retail sites. Suncor manufactures, distributes and markets transportation fuels, heating oils and petrochemicals primarily in Ontario. For more information about the company, visit www.suncor.com.
 ~Staff Report

Suncor wants public consultations on proposed ethanol plant in Ontario

On Dec. 8, the proposed Orange Recycling and Ethanol Production Facility received a boost when the Middletown, N.Y., Common Council approved the project. Pencor-Masada OxyNol LLC plans to build the $200 million waste-to-ethanol plant on 22 acres of an old city landfill. The facility will be able to take in about 230,000 tons of waste per year, and it already has agreements with 24 municipalities that will supply the waste. Private funding is the next step for Pencor-Masada.

Council approves waste-to-ethanol plant

Ethanol Producers and Consumers (EPAC) announced the site of its 14th annual ethanol conference on June 13-15, 2004. The Great Northern Hotel in Helena, Mont., will host the three-day event, called "Energy, Parks and Clean Cities: Gemstones in the Treasure State." Speakers will address the subject of adding value to commodities by producing clean fuels. The vital role of National Parks and the Clean Cities program will also be discussed. For more information, visit www.ethanolmt.org.

EPAC chooses conference site

Premcor Refining Group Inc. (PRG), a wholly-owned subsidiary of Premcor Inc., issued a tender for soliciting proposals from qualified ethanol suppliers in early January, according to PRG spokesman Joe Watson.
 	
 After the Jan. 15 deadline for proposals, the company will award one supplier with the entire demand of its ethanol requirements. The winning supplier will be required to provide product and inventory management at the company's designated locations. Delivery under the new contract could begin around Apr. 1.
 	
 PRG is one of the largest independent petroleum refiners and suppliers of unbranded petroleum products in the United States. The company owns and operates refineries in Port Arthur, Texas, Lima, Ohio, and Memphis, Tenn. with a combined oil throughput capacity of approximately 610,000 barrels per day.
 	
 Premcor's ethanol contracts could possibly last six months to a year, depending on negotiations, according to spokesman Michael Taylor. The contract would be renewable at the end of each term. For more information, contact Bernie Topper at (203) 698-7517 or Bob Luby at (203) 698-7516 or visit. www.premcor.com.
 ~Staff Report

Premcor seeks ethanol proposals

In December 2003, Midwest Renewables broke ground on its $64.5 million, 40-mmgy ethanol plant in Iowa Falls, Iowa. 
 	

 Fagen Inc. and ICM are the design/build firm for the facility, which is due to start operation in December 2004. The plant would take in approximately 14 million bushels of corn and produce 127,000 tons of DDGS, as well as create about 35 jobs.
 	
 According to Russ Stidolph of Whitney & Co., the private equity firm for Midwest Renewables, construction is proceeding ahead of schedule. In early January, crews were pouring the foundation for fermentation tanks.
 	
 A general manager has been hired, although the company won't release a name, and the selection process for the plant manager and other key personnel will start soon. The company has already received $400,000 in loans from a pool of state dollars set aside for value-added agriculture ventures.
 	 
 Midwest Renewables will receive some competition from Pine Lake Corn Processors near Cleves, an ethanol plant project just 15 miles from the Midwest Renewables site. Pine Lake's 20-mmgy facility will cost an estimated $34.3 million. Delta-T, Noble Americus and Monsanto Enviro Chem are partners on the project.
 	
 "We believe that there is sufficient production of corn in the Iowa Falls area and sufficient demand for ethanol worldwide that our plant, the Pine Lake plant and numerous other ethanol plants in the Midwest will be successful," Stidolph told EPM.
 	
 Both facilities plan an expansion if all goes well.
 	
 Midwest Renewables was created in 2001 to make investments in renewable energy companies, primarily in the Midwest, Stidolph said. The company is capitalized by a number of financial institutions and individuals with plans to build a $200 million wind farm in Iowa this year as well.
 
 ~Staff Report

Midwest Renewables breaks ground in Iowa

Northwest Ethanol Development LLC (NWED) announced in mid-December its plans to build a 50-mmgy ethanol plant in Ohio. It would be the first commercial-scale grain processing-to-ethanol facility in the northwest part of the state. An equity drive is currently underway, according to NWED president Lynn Bergman.

 	
 "We're about 60 percent of the way home right now," Bergman told EPM. "It could take another couple months."
 	
 The $82.1 million project will be built near Hicksville. NWED has already been issued all necessary air, water and environmental permits. Once the equity drive is complete and the company wraps up the bank financing, construction could begin two months later. Lurgi PSI of Memphis, Tenn., and ICM Inc. of Colwich, Kan., will be the design/build team for the plant. Malcolm Pirnie, headquartered in White Plains, N.Y., will do the permitting and land development planning.
 	
 Ohio is the sixth largest corn-producing state in the nation and one of the top three ethanol-consuming states, using over 250 mmgy. In addition to ethanol, NWED would supply Ohio with DDGS and CO2, two ethanol coproducts that Ohio currently gets from out of state. The NWED plant would also be the eastern-most source of ethanol in the United States, convenient now that New York and Connecticut have banned MTBE.
 	
 Business partners that have committed to NWED include: The Andersons, an Ohio-based grain originator, which will source the grain for the plant and provide risk management services; Ethanol Products, the second largest ethanol marketing firm in North America, will market and sell the ethanol to a series of oil company and blender customers; Land O'Lakes will market and sell the plant's DDGS; Pain Enterprises will take raw CO2; U.S. Energy will supply natural gas; and Northwest Electric Cooperative will provide the plant's electrical service. 
 	
 The company has raised nearly $2 million to fund its development efforts, and already has approximately 59 investors with strong ties to Ohio. The ongoing equity drive isn't limited to Ohio citizens, however. Interested investors should contact John Grabowski Jr. at JJR Partners of New Hope, Penn., at (215) 862-0500.
 ~Staff Report

Ohio plant gathering equity

Throughout our industry's formative years, we invariably talked about ethanol being good for the farm economy, good for cars and good for Main Street business. Here in the United States, we used to say ethanol was as American as "motherhood, baseball and apple pie." I'll admit, our ideals were a bit hokey, but we believed in the fight. 
 	
 And we still do. 
 	
 Today, however, our focus has been redirected—I think appropriately so—on urban air shed models, ozone, reformulated gasoline (RFG), non-attainment areas, and a host of other issues that have pulled us slightly away from our roots. I'm referring to the roots that gave birth to this industry: independence, freedom, rural economic 
 development, value added agriculture and improving the lot of farm families everywhere. 

 	
 We shouldn't be apologetic about where we came from. It is, after all, the very cause that has allowed the industry to prevail for more than two decades.
 	
 Agriculture is a dominant political powerhouse worldwide. The fact that ethanol is one of the prevailing bright spots on the agricultural horizon and an important contributor to the economic hope of farm families everywhere, keeps it on the front burner of rural economic development activities around the globe.
 	
 While we certainly need to keep abreast of a changing world, I am equally convinced that the very thing that got us where we are today should not be brushed aside like a rusted relic of the past. Rather, it would make good sense for us to go back to our roots and ask why ethanol was important 25 years ago, and is that reason still relevant today?
 	
 In an increasingly competitive rural economic environment, I say it is, perhaps more so than ever. 
 	
 So let's not forget what got us here, and what is still inspiring farm families from California to Ontario, and from Texas to New York, to develop new ethanol plants. It's all about the ability of determined farm families to take control of their own destiny and leave a better place for generations to come. It's about self-determination and saying "no" to the cycle of exporting corn for 
 processing and then buying it back at retail. So while the industry must remain flexible in order to fit into a changing market place, let's remember to stop on occasion and remember our roots. 
 	
 As the old saying goes, "Keep your eye on the eagle."
 
 Mike Bryan
 President, BBI International
 mbryan@bbibiofuels.com

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The Way I See IT

On Dec. 17, Ill. Gov. Rod Blagojevich announced an economic development plan for southwestern Illinois, including a new biotech lab in Edwardsville. Blagojevich allocated $1.6 million to build the 11,700-square-foot lab incubator at Southern State Illinois, next to the National Corn-to-Ethanol Research Center (NCERC). "Although its purpose is not just to support the NCERC, (the biotech lab) will be a facility in which companies that wish an ongoing proximity to NCERC can lease wet labs," said Brian Donnelly, University Park executive director. "The proximity of these companies will, in turn, benefit NCERC." The biotech building would have room for 14 30-by-30-foot wet labs, which would be equipped with special ventilation, plumbing and power systems. A construction date hasn't been set yet.

Illinois Gov. gives funds for biotech lab

DDS Technologies USA Inc. announced on Dec. 29 that it delivered the first of a series of dry disaggregation processors to its joint venture partner Xethanol Corporation, a waste-to-ethanol processor in Des Moines, Iowa. The joint venture company DDS-Xethanol LLC, formed in August 2003, is integrating DDS' proprietary technology with Xethanol's waste-to-ethanol expertise to convert corn waste and other organic waste matter into starch and other valuable coproducts. The starch will be converted into fermentable sugar as a feedstock for ethanol production.

DDS Technologies USA, Xethanol Corp. venture on schedule

In December, Agriculture Secretary Ann Veneman announced the approval of 184 value-added agricultural product marketing development grants in 40 states, totaling over $28.7 million.

 	
 As part of the 2002 Farm Bill, the Value-Added Agricultural Product Market Development Grants program provides opportunities to refine agricultural commodities and products to increase value in the marketplace.
 	
 Interested parties submitted applications for the awards, starting in September. Approximately 16 companies will use the funds to benefit the ethanol industry. Here is a list of those recipients:
 
 Midwest Grain Processors,
 Iowa: $150,000
 Midwest Grain Processors will plan and develop a proposed expansion of its existing ethanol plant.
 
 Central Illinois Energy Cooperative,
 Illinois: $250,000.
 Central Illinois' project consists of the construction of a 30-mmgy anhydrous denatured dry mill ethanol processing facility and a cogeneration facility.
 
 Land of Lincoln Ag Coalition Inc., 
 Illinois: $150,000

 Land of Lincoln will construct a 40-mmgy coal-fired ethanol plant.
 
 Putnam Bio-Products LLC, 
 Indiana: $25,250
 Putnam will use its grant for background work for a biorefinery concept to produce ethanol and coproducts.
 	
 National Corn Growers Assocation 
 (NCGA), Kansas: $175,000
 The NCGA will conduct a feasibility study relating to the development of livestock protein blocks using DDGS as the major ingredient. If the feasibility study is positive, business and marketing plans will follow.
 
 Ethanol Grain Processors Inc., 
 Kansas: $17,500
 Ethanol Grain Processors will update a feasibility study and develop a business plan for a proposed 30-mmgy ethanol plant in Washington.
 

 Agriculture Marketing Institute Inc.,
 Kentucky: $79,900
 The Agriculture Marketing Institute will conduct a feasibility study to determine whether it should convert an existing chemical plant into an ethanol facility.
 
 Michigan Sugar Company, 
 Michigan: $74,120
 Michigan Sugar will analyze the feasibility of using the sugar processing plants it owns and operates for ethanol production.
 
 Barton County Ethanol Production
 Steering Committee, Missouri: $47,500
 The steering committee will move forward with a feasibility study and business plan for an ethanol facility within the region to capitalize on feedstock produced in the area.
 
 Flick Seed Company, Missouri: $50,000

 Flick Seed will utilize waste biomass material to manufacture an alternative fuel in pellet form.
 
 East Central Ag Products Inc., 
 Missouri: $500,000
 East Central Ag Products will put its grant toward working capital for a 20-mmgy ethanol plant.
 
 Garden State Ethanol Inc., 
 New Jersey: $75,000
 Garden State Ethanol will determine the feasibility of using the CO2 byproduct from ethanol production for flash freezing of New Jersey-grown produce.
 
 KAAPA Ethanol LLC, Nebraska: $240,000
 KAAPA will seek a working capital grant to assist in payment for ingredient and production inputs for its 40-mmgy dry grind ethanol plant.
 
 NEDAK Ethanol, Nebraska: $38,500

 NEDAK, a group of producers in north central Nebraska and south central South Dakota will explore the possibility of an ethanol plant, including a feasibility study, marketing study and business operations plan.
 
 Husker Ag LLC, Nebraska: $226,850
 Husker Ag will use funds for personnel and inventory costs associated with its existing 20-mmgy fuel ethanol plant.
 
 United Wisconsin Grain Producers, 
 Wisconsin: $450,000
 United Wisconsin Grain Producers will obtain a working capital grant for start-up costs related to the 40-mmgy ethanol plant to be built in Friesland.
 ~Staff Report

January 2004

Business Briefs

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VeraSun Energy names Jamerson as president, CFO

ICM names Swanson to R&D team

Boynton joins ICM

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A View form the Hill

The Way I See IT

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Maximizing Electrical Investment: The financial impact of motor selection

Buying into Risk Management

United They Stand

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Business Briefs

Sign-up has begun for Fuel Ethanol Industry Directory

T.E. Ibberson earns national safety award

VeraSun Energy names Jamerson as president, CFO

ICM names Swanson to R&D team

Boynton joins ICM

Columns

A View form the Hill

The Way I See IT

Featured

Maximizing Electrical Investment: The financial impact of motor selection

Buying into Risk Management

United They Stand

Great Adaptions

Entering Tariff-Free

January 2004