By TIM ALEXANDER
Illinois Correspondent

BLOOMINGTON, Ill. — A spate of recent grain elevator and ethanol plant license seizures, bankruptcies and closures are bringing mixed reactions from Illinois industry officials as to whether the incidents are a cause for alarm for the state’s grain and ethanol industries.
One under-construction Illinois ethanol plant has closed and three grain dealerships have had their licenses rescinded in recent months.
The liquidation and claims process is underway for claimants owed money by The Grain Exchange, LLC and a sale of the bankrupt Central Illinois Energy ethanol plant appears imminent.
Farmers owed money by another company, A-Way, Inc., were recently mailed checks totaling $3.5 million from proceeds from a sale of assets and the Grain Insurance Fund.
Opinions on the ramifications of the closures, seizures and bankruptcies varied from the two industry sources contacted for comment by Farm World.
“We do not see the recent closures as any type of concern for the Illinois ethanol industry,” said Jeff Adkisson, president of the Grain & Feed Assoc. of Illinois. “The ethanol industry in Illinois and other states are concerned with sourcing corn and these closures do not affect the supply of corn.
“Granted, there could be some contracts between a grain dealer and an ethanol plant that may need to be renegotiated or new contracts made, but that still does not have an impact on the number of bushels available for processing.”
However, said an Illinois grain industry spokesperson who asked to not be identified, the incidents could be cause for concern because they reflect a declining economy that adversely affects agriculture.
“(Corn growers are) concerned about the closures because our strong elevator infrastructure is a real asset and critical to a healthy agriculture industry,” the source remarked. “The current situation is a reflection of the increased volatility in the marketplace ... being caused by increased investor fund involvement in the market, the wheat crop failure, high energy prices and growing demand for all commodities domestically and abroad.”
The seizures and closings have made headlines in many of the state’s newspapers and have had profound negative effects on farmers and investors – as well as on contractors not paid for work. Here are updates on three grain elevator and ethanol plant closures and license seizures:
The Grain Exchange: The Illinois Department of Agriculture (IDOA) hosted a creditors’ meeting on March 6 to explain the liquidation and claims process for The Grain Exchange, a former licensee that operated elevators in Carlyle, Bartelso, Sandoval and Germantown.
The company’s grain assets were seized by the IDOA after revoking its grain dealer and grain warehouse licenses. Company owner John Kniepmann told the Belleville News-Democrat he had been trying to sell his four locations, with a capacity of more than 1 million bushels, for a month.
“I’ve had the business for 15 years, and I’ve never seen market costs like these before,” he said. “All of the major commodities – corn, wheat and beans – are at record highs.”
According to the newspaper, Kniep-mann notified the IDOA on Feb. 15 about the financial strain commodities costs have had on his business.
IDOA followed three days later with its suspension notice for “financial deficiencies” identified by the department’s warehouse inspectors and for not following criteria set forth in the Illinois Grain Code.
Kniepmann told the newspaper it takes “three times the capital to run my business today versus what it took” 18-24 months ago.
“The financial strain is almost overwhelming,” he said, adding that IDOA was just following procedure and he was anticipating the suspensions.
Central Illinois Energy: John Hawkins, news service director for the Illinois Farm Bureau, reported recently that the bankrupt, nearly completed $120 million ethanol plant near Canton will be sold – but who will buy it remains to be seen.
Hawkins cited news sources reporting a Peoria bankruptcy judge approved a process to sell the plant, while turning down a request by a Florida-based corporation interested in buying the plant for a reported $25 million. Another offer, from Credit Suisse, would use $80 million in credit to purchase the plant. The court hopes to finalize the sale of the plant in April.
Meanwhile, farmers who invested in the plant still aren’t sure whether their contacts would oblige them to deliver corn to the plant’s new owners. In addition to the plant’s bankruptcy, CIE’s grain-handling arm had its licenses revoked and grain assets seized by the IDOA, and several contractors filed millions of dollars in mechanic’s liens against the company.
A-Way, Inc.: Farmers who were owed $3.5 million by the defunct Iroquois County grain company have been sent payments, the IDOA announced Jan. 18.
“It was important for us to process these payments a quickly as possible,” said former IDOA director Chuck Hartke. “With spring planting approaching, farmers cannot afford to wait to be paid for their grain.”
The company, which operated elevators in Crescent City and Onarga, closed last August when IDOA warehouse examiners found “significant financial deficiencies” and suspended the company’s licenses.
The elevators were sold to Wheatfield Grain of Wheatfield, Ind.
The purchase, however, did not include A-Way’s debts and the IDOA had to liquidate the company’s grain assets to help pay farmers.

Capacity, production expected to continue rising nationwide

While Illinois’ ethanol and grain industries may be experiencing problems, depending on whom is asked, the immediate future for growth in both industries appears bright on a national level.
The U.S. ethanol industry produced a record amount of fuel ethanol in 2007 and capacity for ethanol production is expected to grow by another four billion gallons this year, according to the Renewable Fuels Assoc.
The National Corn Growers Assoc. (NCGA) said that’s great news for U.S. corn growers, who are always looking for stability and expansion in markets for corn they produce.
“We’re excited to see such growth in the production of ethanol and to see the expansion of the industry’s overall production capacity,” said Steve Ruh, chairman of NCGA’s ethanol committee and president of the Illinois Corn Growers Assoc.
According to a December report by the U.S. Department of Energy’s Informa-tion Administration, the U.S. produced 6.48 billion gallons of ethanol in 2007, an increase of more than 108,000 barrels per day.
Looking ahead, the organization sees room for increased production to meet the requirements of the expanded renewable fuels standard, with another 5.536 billion gallons of capacity under construction.
The completion of these projects would bring ethanol production capacity to nearly 13.5 billion gallons, according to the report.