U.S. ethanol businesses struggling

INDIANAPOLIS, Nov. 16 (UPI) -- U.S. ethanol producers in the Midwest are struggling financially amid falling prices and tightening credit markets, analysts say.

The Indianapolis Star reported Sunday that many ethanol producers have experienced dwindling profits, and some have been forced into bankruptcy.

Most recently, Aventine Renewable Energy Holdings said last week it would slow construction of a plant in Mount Vernon, Ind., and delay the opening for about nine months.

The plant, designed to produce 220 million gallons of ethanol a year, had been scheduled to open early next year. The newspaper also reported the company plans to suspend construction at a plant in Aurora, Neb.

"The margins in the ethanol business today are not very good. They are near break-even," said company spokesman Les Nelson. "We need to make sure we have liquidity in our business."

Some observers say the ethanol industry is suffering from overbuilding and a sudden downturn in the markets and a souring economy.

"I think there certainly was excessive optimism," said Chris Hurt, an agricultural economist at Purdue University. "There was a lot of talk and a lot of interest. But the vast majority of those projects did not go ahead."