CHICAGO, April 30 (Reuters) - Privately held U.S.-based POET Llc has overtaken industry pioneer and global grain merchant Archer Daniels Midland Co to become the top ethanol producer in the world, the companies told Reuters.
ADM had been the biggest ethanol maker since the United States began requiring refiners to mix billions of gallons of biofuels into the nation’s gasoline more than a decade ago, under the Renewable Fuel Standard.
The shift highlights the differing tacks top biofuel makers are taking to address lackluster profits, a supply glut and the oil lobby’s push against the U.S. biofuels program.
ADM is reducing exposure while POET is expanding in an effort to increase profits through efficiency and scale.
POET’s annual biofuel capacity has grown to 1.9 billion gallons and will reach 2 billion by 2019; ADM’s has shrunk to about 1.6 billion gallons, according to figures provided by each company. Prior to this year, both had capacities of about 1.8 billion gallons.
The U.S. ethanol industry has total output potential of more than 16 billion gallons.
ADM, which will report first-quarter 2018 earnings on Tuesday, diverted some of its capacity to beverage and industrial alcohol at its plant in Peoria, Illinois, as part of a strategy to make higher-margin products.
The company last year had also put some of its plants up for sale but did not find a buyer.
Meanwhile, POET boosted output by adding grain fermenters and other upgrades at several of its 27 ethanol plants and is expanding a facility in Marion, Ohio.
POET constantly finds “new ways to increase yield, make gains in efficiency and maximize returns,” Jeff Broin, POET chief executive officer, told Reuters on Friday.
Possible acquisitions by POET of other U.S. ethanol plants are also a possibility, Broin said.
Both POET and ADM are pushing for increased U.S. ethanol exports and more sales of higher-ethanol blends to draw down abundant supplies of both grain and biofuel.
“There are 20 billion bushels of corn, wheat and soybeans stockpiled globally with no end in sight,” Broin said. “This oversupply has led to four straight years of declining farm income, which is why we’re entering into a modern-day (agriculture) crisis.”
Reporting by Michael Hirtzer Editing by Simon Webb and Matthew Lewis