A Leap into the New Year

FROM THE JANUARY ISSUE: Managing Editor Lisa Gibson previews this edition of the magazine, including features focusing on RINs, risk management and the year ahead.
By Lisa Gibson | December 20, 2017

Heading into 2018, we have new Renewable Fuel Standard volume requirements, hopes for new technologies that will increase efficiency or diversify coproducts, and predictions for commodity prices that help form strategies for margin protection. It’s likely how we started 2017, too, and 2016. Maybe 2015. While each year’s overall outlook consists of largely similar categories, the details and scenarios under each evolve.

For this month’s Outlook feature, Ethanol Producer Magazine broke down the industry into five categories—exports, technology, policy, production and finance—and asked an expert in each a few pertinent questions about their predictions for the new year, and comparisons to the last. Respondents talked about the RFS, of course, but also Reid vapor pressure, tariffs in Brazil and China, federal and state funding, innovations, relationships between producers and retailers, and much more. Many battles from 2017 and earlier years will continue to be fought this year. We are ready. Find out what each of the five categories will bring for 2018, starting on page 20.

And as those margins widen and innovative technologies bring new revenue opportunities, the industry diversifies. In the feature beginning on page 26, experts discuss how diversification could lead to more participation in voluntary quality assurance programs. EPA has one in place to ensure validity of renewable identification numbers (RINs), but because of the large size, single feedstock, and automation of the corn ethanol industry, RIN validation has not been an issue. As ethanol plants add feedstock, products and technologies, however, increased complexity could drive the need for more quality assurance programs. Look at it as a diversification tool, not a requirement, one source says.

Finally, the feature that caps this issue is about financial risk management. We delve into three main techniques: technology, commodities hedging and personnel/insurance. Because I’m not a finance whiz, I learned quite a bit while researching and writing this feature, particularly about hedging and market projections. One source says only about half of all operating ethanol companies use commodities hedging as a risk-management tool, despite the fact that it can bring significant rewards. Technologies that diversify into new products can bring more revenue when ethanol prices slump, while investing in proper personnel and insurance upfront can alleviate risks in compliance violation fines or insurance and other payouts that result from employee injuries. All three bring their own unique margin-padding benefits. “People, Processes and Playing the Market” starts on page 30.

I learn a great deal about the ethanol industry with each issue of the magazine I help produce, this being only my fifth as managing editor. It’s complex and broad, but I’m working on becoming an expert. As I leap into this new year with a few editions under my belt, I look forward to more interviews, events and meetings with the industry sources who have shared their knowledge with me. This January issue is yet another success we’re proud to present, and a great product to kick off the new year. I hope you find it informative for your operations in 2018 and beyond. 

Author: Lisa Gibson
Managing Editor