MADERA -- Pacific Ethanol announced Friday that it will temporarily suspend operations at its production plant in Madera County beginning today, blaming "unfavorable market conditions" for ethanol production.
The plant is capable of producing 40 million gallons of ethanol per year. But falling gasoline prices and volatile production costs for the grain needed to make ethanol "have squeezed us from both ends," company spokesman Tim Raphael said.
The company has no timetable for reopening the plant, Raphael said. "We look forward to reopening as soon as market conditions allow."
About 40 people who work at the plant will be laid off temporarily until production resumes. "It's difficult for them, obviously," Raphael said. "That's why we're so anxious to get reopened and get back to work."
Sacramento-based Pacific Ethanol also has production plants in Stockton, Oregon and Idaho. Construction of another plant in Calipatria has been suspended since late 2007.
News of the plant's shutdown concerned Madera County economic development officials.
"Given what is going on in the economy, I was very worried about that business," said Bobby Kahn, executive director of the Madera County Economic Development Commission.
While Kahn wants Pacific Ethanol to reopen, he knows the company faces an uphill climb. "Unless the market conditions really change, some of those workers will be out seeking employment and hopefully be absorbed into the workplace -- or they could face being unemployed for several months."
Pacific Ethanol, which posted a $54.9 million third-quarter loss in November, is not the only one battered by the volatile ethanol industry.
Rival ethanol producer VeraSun Energy in South Dakota recently filed Chapter 11 bankruptcy protection.
VeraSun's struggles have put financial stress on farmers.
"What [farmers] had counted on for their income is just gone," said Darin Newsom, grains analyst at DTN Ag in Omaha, Neb.
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