From: Frederic J. Frommer, Associated Press
Published July 11, 2006 12:00 AM

USDA Questions Sugar-To-Ethanol Profits

WASHINGTON — Making ethanol from sugar could be profitable with the current high demand for the gasoline substitute, but it probably won't be for long, the Agriculture Department said Monday.


At recent spot market prices of $4 per gallon, converting sugarcane, sugar beets, raw sugar and refined sugar to ethanol is profitable, the department said in a report. However, the report added that those spot market prices are expected to drop as more ethanol is produced from other sources, chiefly corn.


"Based on current future prices, the price of ethanol could drop to $2.40 per gallon by the summer of 2007, making it unprofitable to produce ethanol from raw and refined sugar," the report said. "Molasses, from either sugarcane or sugar beets, was found to be the most cost-competitive feedstock."


The report was put together through a cooperative agreement between USDA and Louisiana State University.


Sugar in the U.S. is made from two sources: beets in some northern and western states, and cane in a few southern states and Hawaii. Minnesota is the largest producer of sugar produced from beets, while Florida leads in sugar from cane, according to the American Sugar Alliance, a trade group.


Lawmakers from those states have been pushing sugar-to-ethanol, citing the model of Brazil, which produces ethanol made from sugar cane. Critics note that sugar is much cheaper in Brazil.


Source: Associated Press


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