Pacific Ethanol agrees to purchase 167 million pounds sugar

By Holly Jessen | October 02, 2013

A second ethanol plant announced Oct. 1 it had agreed to purchase sugar through the Feedstock Flexibility Program for Bioenergy Producers. Pacific Ethanol Inc. joins Front Range Energy LLC in taking advantage of the USDA Farm Service Agency program created by the 2008 farm bill.

"We expect this purchase of sugar to significantly lower raw material costs for the Pacific Ethanol plants and give us added flexibility and diversification in our feedstock sourcing,” said Neil Koehler, the company's president and CEO. “We built these plants to accommodate different feedstocks and we are pleased to see the advantage this purchase creates for the company and its shareholders."

The company has an 84 percent ownership interest in three ethanol plants it operates and manages in Boardman, Ore., Burley, Idaho, and Stockton, Calif. A fourth plant, in Madera, Calif., has been idled for years. The purchase agreement is for 167 million pounds of surplus raw beet sugar, which will be blended with corn at the ethanol plants in the next year, the company said.

There are some unknowns about this latest round of sugar offerings, due to the partial government shutdown. The USDA website where additional information is typically available is currently not live, with a message stating it will take a while to become available again after currently lapsed funding has been restored. Therefore, it’s not clear if any other ethanol plants have agreements to purchase sugar through the program. And, Pacific Ethanol did not disclose a purchase price for the sugar it successfully bid for, saying only it came at “a substantial discount to current and expected costs of delivered corn.” The information would also be typically available through the USDA website.

Front Range Energy, a 40 MMgy ethanol plant in Windsor, Colo., previously purchased 14.2 million pounds of table sugar sold for 6 cents a pound, or a total of $854,100. The company bid on the sugar as part of 198.75 million pounds of sugar USDA announced was available through an Aug. 28 bidding deadline.  In the most recent round, about 830 million pounds of sugar was available for bidding through Sept. 26.