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Issues in Production Agriculture

PLSC/EGTE 467

The Ethanol Project

1.  Team Assignments
On Saturday, four segments of the Ethanol Project were identified:  (1) Manufacturing & Production, (2) Supply, (3) Government Relations & Policy, and (4) Marketing and Distribution.   People volunteered for the segment team they were interested in; those that weren’t there Saturday were assigned.  The team assignments are as follows:

Manufacturing & Production                         Raw Product Supply
          Ryan Richardson                                                       Wendy Masters 
                Zak Skibo                                                                  Jay Baxter
               John Place                                                              Josh Plummer
                             James Igou
                                                                                                Russell Arnold

Marketing & Distribution                          Government Relations
             Marion Handlin                                                     Andrew Wilson
                Holly Scuse                                                         Arianne Russell
               Beth Everton                                                         Carrie Furman
 

2.  Key Issues for Each Project Segment

     The Ethanol Project is essentially a feasibility study to determine if an ethanol manufacturing 
      plant on Delmarva would be profitable and if it would benefit regional grain producers.  Each 
      segment team should answer questions towards resolving the feasibility study. 

      1. Manufacturing & Processing:
           a. Obtain an understanding of the manufacturing processes
           b. What is needed in terms of the physical plant (acreage, equipment, transportation access, 
                personnel, etc.)
           c. What is the capital investment?
           d. What are the annual operating costs?

     2.  Raw Product Supply:
          a. Determine what grains are in enough quantity in the region to produce ethanol commercially
          b. Determine the purchase cost and transportation costs of each grain
          c. Determine if there are any efficiency differences between the grains and the manufacture of 
              ethanol

    3.  Market and Distribution:
         a. Compare the economics of ethanol versus gasoline for automobiles
         b. Identify the logistical challenges of getting the ethanol to consumers
         c. Identify marketing costs
         d. Will current automobile engine designs facilitate ethanol use?

    4.  Government Relations & Policy
         a. Identify any federal, state, or local laws or regulations that inhibit/prohibit the manufacture 
              or sale of ethanol
         b. Identify the petroleum industry’s position on ethanol
         c. Will a Delaware-based ethanol plant impact regional farmers?
         d. Could ethanol production on a national scale impact America’s farmers?

3.   Assumptions:

    1.   The plant will be located on 50 acres at the Port of Wilmington.  All transportation modes are available.
    2.    The Board of Directors have dictated that the Wet Manufacturing Process will be used.  Of course, the main product will be ethanol to be blended with gasoline.  The class must determine the market for two by-products: (1) by-products for animal feed, and (2) some by-product that can be sold to manufacturers of any other industrial or consumer product.
4.   Questions to be Answered by Each Team:
Manufacturing:
1. Total capacity of the plant in gallons produced per year
a. Dependent on projected sales
b. Dependent on supply
2. Raw product of barley or corn needed to reach capacity
3. Capital Costs
4. Operating Costs

Supply:
1. Where will the barley or corn come from?
2. What is the projected cost of each crop delivered in to the plant?
3. How much Barley or Corn is needed (See #2 under manufacturing)?
4. What acreage is needed of Barley or Corn to supply needs?

Marketing:
1. How much ethanol can we market to customers in the Mid-Atlantic region?
2. Who are these customers?
3. How do we market the animal feed products?  Where?
4. What is the other by-product and where should we market it?  (Communicate with the Manufacturing Group.)

Policy:
1. Are there regulations that hinder the marketing of ethanol or the by-products.
2. What legislative actions could enhance the production or marketing of the ethanol or the by-products.
3. What environmental permits are needed for the plant? 


5.   OVERALL QUESTION FOR THE ENTIRE GROUP:

1. Does it Pay:  Evaluate Expenses and Revenue
2. Does it benefit the agricultural community through the consumption of grain?
Updated:  15 March 02