The long-delayed launch and botched construction of what aimed to be the Northeast’s largest ethanol production plant is prompting its corn supplier in Troy to buy back more than 800,000 bushels.
Combined with that Oswego County ethanol producer’s decision to seek bankruptcy production last month, the corn buyback deals a symbolic blow to the New York farmers who grew the crop.
Sitting in the silos and a bunker outside the former Miller Brewing Co. plant in Fulton are the bushels of corn a start-up company had intended to use for the production of ethanol fuel at the site. A company called Northeast Biofuels bought much of that corn between September and November shortly after its Fulton facility reached three quarters of its projected ethanol production capacity.
But Northeast Biofuels achieved that interim completed status nine months behind schedule and found the plant riddled with design and construction problems. Those setbacks forced the producer to idle the facility that employs 57 in late 2008.
After clashing with its building contractor over the structural issues and unable to make $44 million in payments to lenders due Jan. 14, Northeast that day filed for Chapter 11 reorganization in a Syracuse bankruptcy court.
Along with trying to find another contractor to remedy problems at the plant and bring it back to operational status, Northeast is trying to get the estimated $2.6 million worth of corn back into the market before the crop deteriorates and its value diminishes. Last Wednesday, U.S. Bankruptcy Court Judge Margaret Cangilos-Ruiz authorized Northeast to sell the corn back to Intersatate Commodities, the Troy commodity trading firm that in February 2008 became Northeast’s exclusive supplier of corn.
“They’re buying it back so they can resell it,” said Interstate attorney Francis Brennan.
The launch of the Fulton plant was expected to be a boon for New York’s agriculture industry. Northeast expected to use up to 40 million bushels of corn for the annual production of 100 million gallons of ethanol.
For the Northeast contract, the 62-year-old Interstate turned its attention to New York corn growers. The firm previously dealt primarily with agriculture operations in the Midwest, South and Southeast.
When announcing the deal with Northeast last March, Interstate President and Chief Executive Officer Greg Oberting said he was “proud to be able to originate grain directly from New York corn growers to a demand customer in New York. That’s never been done before.”
Brennan said he was not sure to whom Interstate would sell the Northeast corn, but he was confident the firm would be able to find buyers for it. If and when the plant becomes operational, Interstate will also likely continue supplying it with corn.