Corn ethanol unprofitable by 2008, says Iowa State

Profits could disappear from the corn ethanol industry by the end of this year, said researchers at Iowa State University, in the latest of a string of doomsday predictions for the industry.

“We think the expected returns to an ethanol plant are zero or negative in 2008,” said Bruce Babcock, economist and director of the Center for Agricultural and Rural Development at Iowa State, in Ames, Iowa.

Babcock cited the rising prices of corn feedstock, increased supplies of the fuel and falling prices as contributing to a negative return on investment.

Approximately eighty corn ethanol plants are under construction in the U.S. alone, according to Babcock. And corn-based ethanol output has been growing fast; this year, U.S. plants will yield about 6 billion gallons.

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