Red Trail Energy LLC's future continues to look bright, says Mick Miller, Red Trail Energy LLC president, Richardton, N.D.
That declaration comes amidst the news of an ethanol plant closure in North Dakota and a possible dip into the North Dakota ethanol production subsidy fund.
Red Trail Energy LLC, which opened about a year ago, is one of North Dakota's newest ethanol plants.
"Business is good," Miller says.
"There's a tightening in margin right now, one way to view it as positive is that it's beneficial for blenders," Miller says.
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And, financial gains for blenders translates to an even more attractive ethanol industry, he says. The result of lower ethanol prices and a surplus of corn production means blenders will likely use more ethanol product, which will expand the marketplace and expand infrastructure, Miller says.
Miller believes another effect of high corn prices and sagging ethanol prices is a slowdown in construction of some new plant projects. He has a watchful eye on prices to see if construction plans can resume if the demand for more plants is eminent.
"We're getting back to an equilibrium of the supply and demand curve," Miller says.
The ultimate goal for the ethanol industry is to relieve the dependency on foreign oil by attracting buyers to American-made renewable fuels. Many people play a part in making ethanol successful, including plants, farmers, blenders and government policy makers.
"We don't like to see plants close, we're in this together," Miller says.
Red Trail Energy is not seeing a direct impact on its business as a result of the recent closure of Alchem Ltd. ethanol plant in Grafton, N.D., because the two plants are nearly 400 miles apart.
One advantage of Red Trail Energy has over the Alchem plant is an availability to the North Dakota ethanol production subsidy fund, which allocates money to ethanol plants based on corn and ethanol prices, Miller says. The Grafton plant does not qualify because the subsidy is intended for newly built plants.
"Although the subsidy has not been used yet, it may be part of our fourth quarter," Miller says.
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Plants such as Red Trail Energy will have funds of $1.6 million available per year and will cap at $10 million in the plant's lifetime.
The fund likely will help balance the bottom line for newer plants during the low ethanol prices and high corn prices. Miller also believes his company has many other factors in its favor.
"We have a niche in the market, a freight advantage, plus energy savings and North Dakota is growing more corn than ever before," Miller said.
Aside from grinding corn into ethanol, Red Trail Energy manufactures distiller's grains, a feed for cattle that is higher in protein than corn.
"The idea is to get farmers to haul in corn and leave with a load of distiller's," Miller says.
Distiller's grains can be loaded wet or dry. Dry feed is cheaper to ship, but Red Trail Energy also has the advantage of using a cost-effective, coal-fired process that produces steam to dry the product, whereas many plants use natural gas.
"Sixty to 70 percent of the distiller's stay in North Dakota," Miller says. All contracts for distiller's grains will be met, he says. Another thing that gives Miller confidence in the future of ethanol is the improvement in corn varieties. Yields become more uniform every year as seed companies develop new varieties, Miller says.
Several factors are affecting Red Trail Energy, many of which, are positive and leave Miller hopeful.
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There's "nothing but a positive future for our company; we're here to stay," Miller says.
