Many positives for Argentina ethanol production
At a time when there are complaints about corn being used for ethanol production and the price of corn as a feedstock is making ethanol production unprofitable, there is economic-based discussion about Argentina jumping into corn ethanol production at a high level.
Argentina is one of very few countries that both exports corn and imports gasoline and diesel. “This combination means that an Argentine ethanol plant will pay less for feedstock and receive a higher price for ethanol than an ethanol plant located in a country that imports feedstocks and exports motor fuels,” notes Bruce Babcock and Migurel Carriguiry in a report, “Prospects for Corn Ethanol in Argentina.”
“Argentina is the world’s second-largest exporter of corn. This export status, when combined with high internal transportation costs, lowers the price of corn in the major production areas of Argentina. In addition, Argentina’s farmers need to plant more corn to create a more sustainable balance between corn and soybeans. In particular, in Argentina’s northern production regions, the large amount of crop residue from increased corn plantings is needed to help build soil quality. Thus, there is significant potential for expansion of corn in Argentina, which makes corn an even better feedstock for ethanol,” wrote the authors as part of their report summary.
Babcock is the Cargill endowed chair of energy economics, director of the Biodiesel Industry Center and a professor of economics at Iowa State University. Carriquiry is an associate scientist at the Center for Agricultural and Rural Development (CARD) at ISU. The report is a CARD staff report.
“The variable or direct cost of converting a ton of corn into ethanol in Argentina is comparable to conversion costs in the United States, with the exception that natural gas costs more in Argentina. For a plant that does not dry distillers grains, conversion costs would be approximately $40 per ton of corn processed. Drying distillers grains adds about $10 per ton. The domestic price of corn in Argentina not only reflects the cost of transporting corn from the interior to Rosario, but it also reflects the effects of export taxes and the need to obtain government permission to export. Over the period from October 2010 to March 2012, the cost of corn to an ethanol plant in the state of Iowa in the United States averaged $110 more per ton than the local price of corn paid to farmers in Córdoba over the same period, and $140 more per ton than the Salta corn price,” the authors further explain.