OMAHA (DTN) -- Omaha-based Green PlainsInc. announced plans earlier this year to sell four to six ethanol plants as part of a plan to make the business more profitable.
In response to a report by Reuters on Monday that the company had shut down plants, Green Plains CEO Todd Becker told DTN on Tuesday his company hasn't shut down a single plant to this point.
"We have not shut down any ethanol plants," Becker said. "We have been flexing our production up and down. We have been doing this for years. The whole story that this is some bigger, broader thing is not true. This is the normal course of business. Any plant can be brought up in a day. We are operating in the exact same manner. It really is business as usual based on what we see in the market every day."
GP announced to the market earlier this year that "certain ethanol plants would be sold," Becker said.
"And, in that process, our single goal is to pay off debt," he told DTN. "We are on track to deliver on that program. We haven't announced which plants."
GP has temporarily idled an ethanol plant in Superior, Iowa, and has seen overall production cutbacks for most of the year. Like most ethanol producers in the United States, Green Plains has had to cut back production because of tight margins this year. During the first two quarters of 2018, GPRE reported it was running at 76% and 80% of production capacity because of tight margins.
Becker said the industry needs President Donald Trump to defend its interests.
"The (small-refinery) waivers are not helping it," Becker said. "That is a potential driver in lower demand."
Small refineries who received waivers, he said, then generate renewable identification numbers, or RINs, and sell those at a profit. In addition, Becker said the industry needs the administration to allow year-round E15 sales.
"It will be a fuel that outsells everything," Becker said.
Reuters reported on Monday, however, that the company was closing some plants in Iowa in advance of selling at least some of the company's ethanol assets.
GP spokesperson Jim Stark said other company Iowa plants in Lakota and Shenandoah are still running.
"We do not openly discuss our run rates at any given plant or which plants may not be running," Stark said. "We are also weeks away from our fall maintenance shutdown where a majority -- if not all -- of our plants go down for two to four days depending on the work we plan to do at that location. This happens twice a year."
Back in May, the company announced it was considering selling assets as part of a "portfolio optimization plan." As part of that plan, the company has been expanding its cattle business and is investing in vinegar production.
In a May 2, 2018, quarterly report to the U.S. Securities Exchange Commission, the company said: "As part of our long-term strategy for improving our profitability and return on invested capital, we continue to evaluate the performance of our entire portfolio of assets and businesses. Based on this evaluation, we may sell certain assets or businesses or exit particular markets that are no longer a strategic fit or no longer meet our growth or profitability targets."
In an Aug. 30 filing with the SEC, http://investor.gpreinc.com/…, GP said, "Based on current market conditions, the company is reassessing our production levels previously announced in our second-quarter earnings call on Aug. 1, 2018."
Becker said the company filed the Aug. 30 SEC statement to modify what it said in an Aug. 1 earnings call, which at the time included comments that Green Plains didn't plan to cut production further.
Green Plains operates 17 ethanol plants across the country, with a production capacity of about 1.5 billion gallons. Currently, the company is one of the top five ethanol producers in the United States.
Pavel Molchanov, senior vice president and equity research analyst at Raymond James and Associates, said overall over-production in the industry has been a profitability challenge.
"The crush spread has been weak for much of the past 12 months," Molchanov said. "In this context, Green Plains has already had some temporary, price-related plant shutdowns -- so yesterday's news is simply the latest instance of that."
The Renewable Fuel Standard sets a floor for domestic ethanol consumption, Molchanov said, "but the industry is producing well in excess of that. Most of the surplus goes for export, but because of the various trade conflicts -- especially, but not solely, with China -- export volumes have faced pressure. That's the central issue here."
Todd Neeley can be reached at firstname.lastname@example.org
Follow him on Twitter @toddneeleyDTN
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.