High corn prices put halt to ethanol production - WDAM - TV 7 - News, Weather and Sports

High corn prices put halt to ethanol production

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For the last four years, Bunge-Ergon has been turning corn into ethanol. Now, the plant is turning away from its ethanol production, all thanks to a record high spike in corn prices.

"It is a concern because you don't want anybody losing their jobs in Mississippi and it does produce that. But it's kind of typical for ethanol plants right now," said Agriculture and Commerce Commissioner Cindy Hyde-Smith.

Hyde-Smith says droughts in the mid-West are the main culprit behind the approximate $7.50 per bushel of corn. That's something Hyde-Smith says wasn't expected. Because of it, Ergon will suspend production of ethanol by the end of November, then reassess marketing conditions and decide whether to start up again next year.

"When it's so expensive you just have to weigh those input costs with what you're going to actually get for your product," said Hyde-Smith.

In an industry often touted for its job creation, with the suspension of production comes layoffs. The Department of Employment Security is working with those impacted through rapid response teams. With the high cost of production, the Mississippi Development Authority is keeping a close watch on what it could mean for the state and its renewable resources.

"Whether this is a trend or not is yet to be determined. This is one company. It's a large deal for the people involved but the energy sector has many facets," said Dan Turner, spokesman with MDA.

Hyde-Smith says a suspension in production doesn't mean the plant will cease to exist. It's just a break until the market loss on corn can adjust.

"One year something is really profitable. Five years from now, it may not be as profitable, just like cotton is not king right now but it was for a long time," said Hyde-Smith. "Those cycles normally come back."

Hyde-Smith says the corn prices aren't just affecting ethanol producers and petroleum products. It's also causing problems in industries like cattle, poultry and catfish, all of which mean jobs and money in Mississippi.

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