Industry assesses flooding impact

By Jessica Sobolik | July 08, 2008
The floodwaters have subsided in Iowa, the nation's No. 1 corn- and ethanol-producing state, but the water continues to flow south. Many homes and businesses have been affected, including cornfields and ethanol plants. In many areas, the damage is being assessed, and for the ethanol industry, it is still too early to tell what impact Mother Nature has had.

On June 27, Monte Shaw of the Iowa Renewable Fuels Association reported that no more than 10 million to 15 million gallons of production was lost in Iowa due to flooding.. Only three ethanol plants were directly affected, but one—Penford Products Co.—had just completed construction and was about to come on line. Therefore, current production capacity was lost. Archer Daniels Midland Co. had to shut down its plant for a short time due to a disruption in water service. At press time, it was running at partial capacity. A third unnamed plant reduced but didn't halt production because there was no available rail service to ship the product from the plant. The plant instead shipped its product via truck. "I don't want to diminish what's going on right now," Shaw told EPM. "The floods were devastating. It'll be years, not months, before things are back to normal. I've heard some people say this is the ‘Hurricane Katrina of Iowa.' However, when it comes to fuel production, not all ethanol plants are in Iowa, unlike the oil refineries in Houston. Not that much ethanol production will be affected."

Shaw said the real story in this time of tragedy is how ethanol was still able to be delivered to customers via rail, truck or barge. "Yes, there was an embargo in Chicago, and shippers had to go around the closed Union Pacific line," he said. "It wasn't easy to do it. I have to tip my hat to the logistics guys in this industry. They really worked hard and utilized the flexibility of the system. That's something the oil industry can't do."

The USDA's National Agricultural Statistics Service released its annual acreage report as scheduled June 30, despite having to reinterview farmers after the floods hit. The report concluded that U.S. farmers intend to harvest 90.4 percent of their planted corn acres, down from 92.4 percent before the floods. NASS acknowledged that accurate data might not have been available by the June 30 deadline, so it plans to conduct a more extensive update of planted and harvested acreage in impacted areas in July. That information will be available in the USDA's Crop Production report to be released Aug. 12. A review of the acreage report can be found under the Web exclusives section of www.ethanolproducer.com.