Sugar Not Cost-Effective for U.S. Ethanol Production

Ethanol made from sugar cane and sugar beets would cost between $2.35 and $2.40, while corn ethanol costs only $1.03 to $1.05 per gallon.

Unlike our Brazilian counterparts, the current sugar program in the United States makes sugar not cost-effective as an ethanol feedstock.

A new study from USDA's Office of the Chief Economist finds that ethanol made from sugar cane and sugar beets would cost between $2.35 and $2.40 per gallon in the U.S., while ethanol produced from corn costs only $1.03 to $1.05 per gallon.

Molasses, from either sugarcane or sugar beets, was found to be the most cost competitive feedstock. Estimated ethanol production costs using molasses were approximately $1.27 per gallon with a $0.91 per gallon feedstock cost.

In addition, a 20 million gallon per year ethanol plant using sugarcane or sugar beets as a feedstock would be expected to have capital expenditure costs in the range of $2.10 to $2.20 per gallon of annual capacity, compared to an estimate of $1.50 per gallon of annual capacity for a corn-based facility, USDA finds.

Brazil and several other countries are producing ethanol from sugarcane, sugar beets, and molasses, demonstrating that it is economically feasible to convert these feedstocks into ethanol. However, the economics of producing ethanol from sugar feedstocks in these countries is not directly comparable to the economics of producing ethanol from sugar feedstocks in the United States. Many factors play into the production figures including prices of sugarcane and sugar beets, sugarcane and sugar beet production costs, ethanol production facility construction and processing costs.

"To make sugar competitive in U.S. ethanol production, we would have to dismantle the current sugar program, which would drive our growers out of business, or offer big subsidies to reduce the price of sugar," states Congressman Collin Peterson, D-Minn. "Neither of those options will have much support in Congress or in rural America."

Find the report at www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf.

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