- LA DNR - Technology Assessment Division

Crop	Feedstock	- Byproduct Credit	= Net Raw Material Cost
Sugarcane Molasses	$ 1.02	0	$ 1.02
Corn	$ 0.99	$ 0.36	$ 0.63
Grain Sorghum	$ 0.79	$ 0.36	$ 0.43
Sweet Sorghum	$ 1.95	0	$ 1.95
Rice*	$ 2.05	$ 0.36	$ 1.69
Wheat	$ 1.24	$ 0.44	$ 0.80

*1984 price

Data Source:

"Louisiana Farm Reporter," Annual Crop Summary - 1985, Louisiana Crop and Livestock Reporting Service, Box 5524, Alexandria, LA 71307-5524.

The primary benefit of ethanol is its impact on the state's agriculture. Louisiana's major crops are shown in Table III. The crops that may be used to produce ethyl alcohol are sugarcane molasses, corn, grain sorghum (milo) and wheat. Rice, which is also used to produce beverage alcohol, is the state's most expensive feedstock for fuel alcohol. There is an interest in molasses from sweet sorghum as a feedstock although this is not being grown commercially in Louisiana. What is known about sweet sorghum is presented in a section of this report on that crop.

TABLE III
Major Louisiana Crops

Crop	Acreage Harvested 1,000s		Yield per acre		Production 1,000s		Value of Production 1,000,000s
	1984	1985	1984	1985	1984	1985	1984	1985
Cotton (bale)	645	630	786	571	1,056	750	$275	$195
Corn (bu)	82	205	115	114	9,430	23,370	$32	$61
Rice (cwt)	528	463	4150	4370	21,932	20,256	$180	N/A
Sugarcane (ton)	230	250	22.0	24.3	5,060	6,075	$121	N/A
Grain Sorghum or Milo (bu)	269	410	65	68	17,485	27,880	$47	$58
Soybeans (bu)	2,430	2,100	27.5	21.0	66,825	44.100	$401	$223
Wheat (bu)	320	210	41	34	13,120	7,140	$46	$23
Hay (ton)	340	320	2.40	2.32	816	741	44	$39
Total acreage (Louisiana)	*4,895*	*4,629*

Source:

"Louisiana Farm Reporter," Louisiana Crop and Livestock Reporting Service, Box 5524, Alexandria, LA 71307-5524

Sugarcane

Molasses from sugarcane has been the predominant feedstock in Louisiana for fuel alcohol as of this writing. One of the primary intents in exempting gasohol from the motor fuels tax in l979 as expressed in Act 793 was "...to assist in maintaining Louisiana's sugarcane industry as a viable producer of sugar; to encourage the utilization of sugarcane and other commodities for energy purposes." In this the Legislature succeeded. In l984 Louisiana sugar farmers produced enough molasses for l2.l million gallons of ethanol and in l985 enough for l4.6 million gallons of ethanol. This was sufficient to meet the home grown feedstock requirements for the Louisiana tax exemption in l985 (10 percent) and is just barely sufficient to meet the l986 home grown requirement of 35 percent. In fact, if the molasses based plants operate at capacity in l986 they will have required 82 percent of the previous year's harvest if they are to meet the legal requirements to qualify for the gasohol tax exemption. This has resulted in the domestic (Louisiana) price for molasses being bid up from $45 a ton to $70 a ton or a 56 percent increase in the past year. This price increase was attributed to one alcohol plant alone and the reason given for raising the price to this level was to preserve Louisiana molasses for ethanol production. Feed lot operators, the principal competing users of molasses, can get their carbohydrate from other sources it was said; the ethanol plants cannot.

Louisiana molasses based ethanol producers have been the first domestic producers to consume large amounts of molasses. They are also important consumers of molasses worldwide. They now are being joined by virtually all sugar producing Caribbean Basin countries in producing fuel alcohol from molasses for the American market. This alcohol will be allowed to enter the U.S. under very favorable terms under the Caribbean Basin Initiative, although there is opposition in Congress. This is causing molasses prices to rise worldwide to Louisiana levels. A study released by IOP Associates in April, 1986, to the U.S. House Ways and Means Subcommittee on Trade says that the rising value of molasses is likely to significantly crimp supplies of hydrous ethanol in the Caribbean Basin, both in the short-run and in the next five years. The price of molasses is expected to average 69 dollars per ton through 1992.

Another interesting fact is the effect that Louisiana ethanol production has had on the domestic sugar price. The U.S. sugar price is set by federal farm policy. One large producer in the state recently bid on a very large quantity of surplus sugar to produce ethanol. When the bid was awarded, the U.S. price of sugar went up l5 percent, at least for a short while. Alcohol Week confirms this in part; they report that the price of sugar rose a cent a pound when USDA announced it was accepting bids to take forfeited sugar off the human consumption market.

The question which is often asked is, "How much have Louisiana farmers benefitted from fuel alcohol production in Louisiana?" The l985 crop is the first one to benefit from the 25 dollar per ton run up in the price of molasses. The sugar prices are being set by USDA activities. The only grain based plant in Louisiana had just come into production in l985 and had not had time to be a factor. Several grain based feedstocks will also be considered later in this report. Another benefit to be considered is the l78 permanent jobs generated at the gasohol plants which were in production in 1985.

What does the future hold for molasses feedstocks? There is just about the right amount of molasses from the l985 crop to meet Louisiana's 35 percent home grown requirement in l986. There will not be enough molasses grown in Louisiana in 1986 to meet the 100 percent home grown requirement on the books for 1987 unless some current molasses users switch to grain. One large producer has plans to be able to use grain by mid 1987. There are a number of choices available to the state's fuel alcohol producers. They can equip their plants to use corn, grain sorghum (milo) or perhaps wheat. The raw material costs are currently less than those for molasses (Table II above). Feeding grain as well as molasses at existing facilities would be very beneficial as it creates a demand for grain from the same tax incentive. The raw material cost of the various crops are summarized and compared in Table V. There has been real interest in having sweet sorghum grown for molasses feedstock. This is an "ify" proposition as one has to convince hard pressed farmers they should quit what they are currently growing and plant a crop that is not in commercial production in the region. Hundreds of thousands of acres would be required to meet current and prospective l987 demands for the 100% home grown requirement. An ethanol producer could greatly expand the amount of molasses available in l986 and later by contracting for high test molasses ahead of time from sugarcane harvest, but this is prohibitively expensive. High test molasses is basically molasses with no sugar taken out. Or a manufacturer could contract for overseas molasses for his needs and forgo the state tax exemption. Using grain for additional feedstocks would seem to be the most economic choice.

TABLE V
LOUISIANA: SEASON AVERAGE PRICE AND VALUE OF PRODUCTION

		PRICE
CROP	UNIT	1984	1985
Cotton Lint, All	Lb.	0.543	0.542
Cottonseed	Ton	79.00	49.50
Corn, Grain	Bu.	3.35	2.60
Wheat, Winter	Bu.	3.50	3.25
Rice, All	Cwt.	8.20	-
Sugarcane, All	Ton	23.90	-
Sorghum, Grain	Bu.	2.69	2.07
Potatoes, Irish	Cwt.	11.20	14.00
Sweet Potatoes	Cwt.	7.90	5.30
Soybeans, Beans	Bu.	6.00	5.05
Hay, All (baled)	Ton	54.00	53.00
Strawberries, All	Cwt.	54.00	53.00
Peaches	Lb.	0.35	0.33
Pecans, All	Lb.	0.540	0.461
Pecans, Improved	Lb.	0.750	0.700
Pecans, Native	Lb.	0.450	0.410

Source:

Louisiana Farm Reporter (1985 is the latest year currently available)

Sugarcane Acreage

A sample calculation showing the acreage needed to produce 100 million gallons of ethanol, or roughly 50 percent of the state's gasoline market being supplied by gasohol is shown for each of the state's crops except for sugarcane, sugarcane is a special case. An additional sugar mill is required along with additional acreage, and such a mill is an expensive long term investment. The history of the sugar industry in Louisiana in the past ten years or so has been to shut down sugar factories and cannibalize them to keep the rest in operation. The number of mills currently operating in Louisiana is roughly one half what it was ten years ago.

Louisiana's 1985 sugarcane crop was 250,000 acres. The 1985 molasses production was 36.5 million gallons at 6 gallons per ton of cane or enough molasses to produce 14.4 million gallons of anhydrous ethanol. Average molasses production year in and year out has been roughly 36 million gallons.

TABLE IV
Acreage/Ethanol Calculation for sugarcane

Acres = 275,000 (limited by the number of sugar mills)
Harvest = 6.5 million tons of cane (1986 December estimate)
Molasses = 6.5 million tons x 6 gal/ton = 39 million gallons
Ethanol = 39 million gallons x 1 gallon ethanol/2.5 gallons molasses
= 15.6 million gallons of ethanol

Grain Sorghum (Milo): The second feedstock to actually be used for fuel alcohol in Louisiana is milo. The Louisiana Farm Reporter relates that l985 grain sorghum production was a new record, breaking the l984 production record. (The actual acreages, yields, and production may be found in Table III where they may be compared to the other major Louisiana crops.) The point that both l984 and l985 milo harvests were record crops is noteworthy, indicating a shift to milo similar to that for corn. This shift is independent of gasohol plants up to this point as the milo-to-ethanol plant produced only token amounts of ethanol in l985. In fact no fuel alcohol sales were reported to the Department of Revenue and Taxation from this plant in l985. The l985 U.S. milo crop was up 28 percent from the l984 crop and was a record high. The Louisiana seasonal average price for milo declined by 23 percent which was bad for the farmer but has made it the state's best bargain as an alcohol feedstock. The net raw material cost for ethanol from grain sorghum in l985 was $0.43 per gallon. This compared to a net raw material cost for ethanol from molasses of $l.02 per gallon, which was good for the sugar farmer but not so good for the ethanol producer. In l985, l7.6 million gallons of fuel ethanol was produced, virtually all from molasses. If it had been produced from milo instead, the state's gasohol industry would have been able to save itself $l0.4 million dollars on feedstock, based on the preceding figures. Louisiana's largest users of molasses plan to be able to use grain by mid l987. This will ease the one-feedstock strain greatly.; Currently a strong imbalance exists in the crops being used as alcohol feedstocks. Only one type of farmer was able to derive any benefit from the gasohol tax exemption in l985. The state's sugarcane molasses crop was almost oversold in l986 and will certainly be so when the home grown requirement is raised to 100 percent. This imbalance should improve some in early 1986 when production begins in the state's first grain based plant and improve substantially in late 1986 when the second such plant is completed. In late 1986 Shepherd Oil should be able to use grain or molasses as feedstock which should balance out the benefits of the gasohol tax exemption to all the various types of farmers who can produce ethanol feedstocks.; Two acreage levels are calculated for each of the Louisiana's grain crops. The higher level, enough acreage to produce 100 million gallons of ethanol, represents the case where roughly 50 percent of the state's gasoline market is being supplied by gasohol. When the plants that are currently under construction are completed in 1987, the alcohol capacity to supply 75 to 80 percent of Louisiana's gasoline demand will be in place. The lowest figure, enough acreage to produce 40 million gallons of ethanol, is roughly the total capacity of the state's fuel alcohol industry at the beginning of 1986.; Milo is the first grain crop to be used as feedstock beginning in 1985 in Louisiana. At this writing it is also the state's best bargain price-wise of all the crops that could be used for such a purpose. Exactly how grain sorghum's price behaves remains to be seen, but gasohol's impact will be small until some of the molasses-based plants develop the ability to use milo and other grains in mid 1987. The state's largest plant is scheduled to come on-line in the fall of 1986. It is designed to use corn, although it could use grain sorghum as well.

TABLE VI
Acreage Calculation - Milo

For l00 million gallons of ethanol per year
Acres = l00 x l0⁶ gal. ethanol x 0.38 bu/gal. x acre/68 bu
= 560,000 acres of milo

For 40 million gallons of ethanol per year
Acres = 560,000 x 0.4
= 224,000 acres of milo

Corn: In the past two crop years corn production has gone from almost nothing to a 205,000-acre crop for Louisiana with yields essentially as good as those for rest of the nation. While corn is the most widely used ethanol feedstock in the U.S., none is currently used in Louisiana for this purpose. There is a large plant under construction on the Mississippi below New Orleans which will use corn. It is scheduled for completion in late 1986. In addition, in 1986 when the Louisiana home grown feedstock requirements go to 100 percent, at least one plant which uses molasses exclusively plans to be able to use some grain as well. Farmers in the state have shown a big interest in corn without any influence from alcohol; therefore, it seems highly likely that they will be willing and able to accommodate almost any new demand gasohol plants might produce.

TABLE VII
Acreage Calculation - Corn

For l00 million gallons of ethanol per year
Acres = l00 x l0⁶ gal. ethanol x 0.38 bu/gal. x acre/114 bu
= 333,000 acres of corn

For 56 million gallons of ethanol per year
Acres = 333,000 x 0.56
= l86,000 acres of corn

Distillers Dried Grains (DDG): In calculating the feedstock cost of grain there are some valuable by-products which must be taken into account. The most valuable are a family of very nutritious animal feed supplements generally referred to as distillers dried (or sometimes wet) grains (DDG). The stillage (the solids left behind after the alcohol is distilled off) from fermentation contains fibrous carbohydrate material, protein from the original feedstock, high- protein yeast produced in fermentation and solubles which include various minerals and other nutrients. DDG is generally marketed at 10 percent moisture and has a protein content on the order of 25 to 28 percent dry basis. This is lower than soybean meal which is about 45 percent protein, but significantly higher than corn which is about 9 percent. DDG is a widely traded commodity worth $110 per ton compared to corn at $85 per ton at this writing. One ton of corn fed to an ethanol plant produces 0.3 tons of DDG.; The net raw material cost for ethanol from corn is $0.63 per gallon based on $2.60 per bushel corn and $110 per ton DDG. The average selling price of the 1985 Louisiana corn crop was $2.60 per bushel. The $0.63-per- gallon net material cost for corn indicates that it would have been more economic to have used corn in 1985 than molasses which had a net raw material cost of $1.02 per gallon. In fact it cost the ethanol producers who used molasses 62 percent more than corn would have cost. This was not the case in the previous year when corn was considerably more expensive and molasses was cheaper. This situation demonstrated however, the considerable advantage of being able to use grain as well as molasses as a feedstock.; The question arises then why have these producers not moved towards a cheaper and more plentiful feedstock? The answers, at least in part, are as follows: (1) significant additional capital investment is required to install grain handling and solid fermentation equipment to what is currently an all liquid process plant; (2) In 1985 all of the plants were still in the startup phase of their operation. The fuel alcohol industry across the U.S. has been especially prone to initial startup problems. The rule of thumb is that it takes two years to work all of the bugs out of a new operation. Also, cash flow is normally still negative during the initial phase of operation, making it very difficult to raise additional capital for a major process modification. Finally with grain there is a very valuable byproduct, DDG, which the alcohol producer also has to market. In fact, producers in states where the tax exemption is not so large may make more money off of their DDG than they do from their alcohol operation. But in Louisiana the local market for DDG is thin and would have to be developed or the DDG shipped to market in other localities. The economics at the time of this writing present an even more compelling economic case for these producers to develop the ability to use Louisiana corn in addition to the fact that there simply will not be enough molasses to go around in 1987 and later years. Most of the molasses based producers plan to be able to use grain in l987.; Two acreage levels are calculated for each of Louisiana's crops. The higher level, enough acreage to produce l00 million gallons of ethanol, represents the case where roughly 50 percent of the state's gasoline market would be supplied by gasohol. When the plants that are currently under construction are completed in l987, the alcohol capacity to supply 75 to 80 percent of Louisiana's gasoline demand will be in place. The lower figure, enough acreage to produce 56 million gallons of ethanol, is roughly the total capacity of the corn based fuel alcohol plant under construction at Myrtle Grove.
Rice: Rice was Louisiana's largest grain crop in terms of acreage in 1985. Acres harvested were down 12 percent from the previous year while posting a record yield. The 1985 season average price is not available yet. The normal wait for rice and sugarcane figures is one calendar year. The net raw material cost for ethanol produced from rice is $1.69 per gallon based on 1984 prices. Rice therefore is the most expensive fuel alcohol feedstock among the major crops grown in Louisiana.; Two acreage levels are calculated for each of Louisiana's grain crops. The higher level, enough acreage to produce 100 million gallons of ethanol represents the case where roughly 50 percent of the state's gasoline market would be supplied by gasohol. When the plants that are currently under construction are completed in 1987, the alcohol capacity to supply 75 to 80 percent of Louisiana's gasoline demand will be in place. The lower figure, enough acreage to produce 40 million gallons of ethanol, is roughly the total capacity of the state's fuel alcohol industry at the beginning of 1986.

TABLE VIII
Acreage Calculation - Rice

Acres for 100 million gallons of ethanol per year
Acres = 100 x 10⁶ gal ethanol x ton/80 gal. x 20 cwt/ton x acre/43.70 cwt
= 570,000 acres of rice

Acres for 40 million gallons of ethanol per year
Acres = 570,000 x 0.4
= 250,000 acres of rice

Wheat: Wheat is a substantial grain crop in Louisiana with an acreage virtually equal to that of corn in 1985. The price of wheat is higher than for corn or milo and the yield per acre much lower, as can be seen in Table III. Wheat production in 1985 was down 46 percent from the 1984 level. The acreage harvested was down 34 percent and the yield 17 percent for the same period. The 1985 net raw material cost for ethanol produced from wheat was $0.80 which is higher than that for milo or corn but lower than that for sugarcane molasses.; Two acreage levels are calculated for each of Louisiana's grain crops. The higher level, enough acreage to produce l00 million gallons of ethanol, represents the case where roughly 50 percent of the state's gasoline market would be supplied by gasohol. When the plants that are currently under construction are completed in l987, the alcohol capacity to supply 75 to 80 percent of Louisiana's gasoline demand will be in place. The lower figure, enough acreage to produce 40 million gallons of ethanol, is roughly the total capacity of the state's fuel alcohol industry at the beginning of l986.

TABLE IX
Acreage Calculation - Wheat

For l00 million gallons of ethanol per year
Acres = l00 x l0⁶ gal ethanol/gal. x 0.38 bu x acre/4l bu wheat
= 930,000 acres of wheat

For 40 million gallons of ethanol per year
Acres = 930,000 x 0.4
= 370,000 acres of wheat

Sweet Sorghum: For years there has been a great deal of interest in the prospects of growing sweet sorghum for fuel alcohol. This is especially the case now as the sugarcane molasses crop was essentially sold out in l986 and will be oversold when the home grown exemption requirement rises to 100 percent unless enough molasses based plants install grain fermentation equipment to alleviate the situation. Year in and year out Louisiana produces enough molasses to make roughly l4.4 million gallons of anhydrous alcohol. The molasses-based plants in operation at the beginning of l986 had a combined capacity of 34 to 36 million gallons of ethanol. The state's home grown requirement in early l986 was 35 percent which works out to require ll.9 to l2.6 million gallons of ethanol be produced from Louisiana molasses if all of the capacity is to be eligible for the state's tax exemption. In late l986 the home grown requirement rises to 100 percent while the sugarcane molasses supply remains the same. If the current molasses based plants wish to be eligible for the tax exemption in l986, they must find an additional source of feedstock such as sorghum syrup, or they must install the equipment necessary to use grain such as corn or milo. This is one of the reasons there has been so much work going on to evaluate sorghum. In addition, there is under construction in New Iberia a molasses-to-ethanol plant which will produce 35 million gallons per year of ethanol. At least one large plant currently in production is planning to install grain handling facilities by the middle of l986 which will ease the supply situation somewhat. But there still will not be enough Louisiana sugarcane molasses for all those who wish to use it, thus the interest in sorghum.; Another consideration is that virtually all sugar producing Caribbean Basin countries are joining Louisiana producers in producing ethanol for the U.S. market through the Caribbean Basin Initiative. This is further restricting molasses supplies and bidding its price up.; Sweet sorghum is grown on a small scale for syrup and silage. Research with sweet sorghum for sugar production which would be processed in August and September prior to the maturing of sugarcane has been conducted in Louisiana for over l00 years. Production of sugar has never been successful for several reasons. The high starch and aconitic acid content in the juice prevent the sugar from crystallizing out. This should not present a problem in fuel alcohol processing as the sugars would be fermented directly from the juice or molasses. In fact, the amount of molasses produced per acre would be several times greater for sorghum than for sugarcane as no sugar is removed in the sorghum case.; In l983, 250 acres of sweet sorghum was planted in Breaux Bridge, Louisiana to establish the feasibility of using this crop to produce ethanol. Much was learned from this large scale field trial as well as other smaller ones conducted by LSU since l979. This work has been aimed directly at establishing the feasibility of producing alcohol from sorghum molasses. Unfortunately, the most recent analysis (1986 Budget) prepared by Drs. Heagler and Fontenot indicate that sorghum molasses feedstock under the yields that can be expected will be too expensive for fuel alcohol production. At Breaux Bridge the growers and processors experienced numerous problems in growing, harvesting, and processing of the sorghum. Both the agricultural and processing problems for this crop, especially those for which no simple solution seems forthcoming, are discussed below from a paper by Dr. Giamalva of the LSU Sugar Station.; The price arrived at by Drs. Heagler and Fontenot in their l986 Budget for farmers to make a profit at the yields that may be expected was l5 cents per pound of fermentable sugar. Dr. Ray Ricaud of the LSU Agricultural Experiment Station arrived at the same figure elsewhere. This translates to a raw material cost alone for ethanol of $l.95 a gallon or more. The 1986 selling price for fuel alcohol was $0.74 per gallon.; Sugar mills in Louisiana process sugarcane into raw sugar and molasses beginning in October each year continuing into December. In the Louisiana sugar belt, sweet sorghum matures in late August through September. The sugarcane factories are very interested in having an additional crop during the 9 to l0 months they normally remain idle. Farmers of the sugarcane growing area of Louisiana are looking for additional alternative crops to be grown in their area. Interest has been shown as far north as Meeker in replacing some soybean acreage or using sorghum as a companion crop to sugarcane, in some fallow land, or cropping on land not committed to sugarcane. A regular grain drill was used at Breaux Bridge for planting using grain sorghum plates. This resulted in over planting which reduces stalk size and juice quality. The problem was corrected at LSU by hand thinning but the cost in commercial situations would be prohibitive.; Difficulties in harvesting were encountered when using the conventional soldier type of Louisiana sugarcane harvester. This type harvester removed most of the tops and none of the leaves. The newer, two row Louisiana harvester was the most efficient machine, especially when lodging occurred. When cut at the maximum height (8 feet) with either type machine, the difficulty was in loading. The tractor, drawing the wagon being loaded, rolled over the tops or bottoms of the cane stalk resulting in too many whole stalks being left in the field. Some sorghum was cut with a combine type harvester, which cut the stalks into 11 inch pieces. With this type of machine, special wagons fabricated from expanded steel are required and losses were too high in the mill yard because existing equipment failed to pick up many pieces. Harvesting with the combine harvester was much slower than with the soldier type machine.; Because of the leaves left on the canes, washing did not remove the sand and silt on the cane. This resulted in excessive wear on the rollers. These leaves also decreased the bulk density of the material being ground so that choking occurred by flooding the rolls with shredded material. To rectify this problem, preparation of the cane prior to entering the mill train was reduced, grinding speed was reduced and pressure on the mill rows reduced. Most cane was harvested and processed immediately. Some as left on the ground in heaps for as long as 52 hours was burned. At this time a mill breakdown occurred, resulting in another 24 hour delay. For this cane only 20 gal. of molasses was produced from each ton of cane.

TABLE X
Acreage Calculation - Sweet Sorghum

Assume 20 tons of sorghum per acre ( a very good yield)
Fermentable sugars = 134.46 lbs per ton of cane (Breaux Bridge field test)
1 gal. ethanol = 13 lbs. sugar

For 100 million gallons of ethanol per year
Acres = 100 x 10⁶ gal ethanol x 13 lb. sugar/gal ethanol x ton of cane/134.46 lb. sugar x acre/20 tons of cane
= 483,000 acres

For 35 million gallon of ethanol per year
Acres = 483,000 acres x 0.35
= 169,000 acres

Go to Basic Ethanol Production

Return to Table of Contents

WEB SERVICES AND POLICIES

DNR SITE MAP

CONTACT DNR

	This Web site is designed and maintained by employees of the Department of Natural Resources.
	This page updated June 1989