In a Tuesday conference call with analysts, ADM Executive Vice President John Rice said in response to the US recession, operators had lowered production capacity to 10.2 billion gallons a year, down from a record of 12.9 billion in the second half of last year.

ADM, a major ethanol producer, on Tuesday reported $585m net earnings for the quarter ending 31 December, up 24% from the same year-ago period. Sales rose one percent to $16.7bn.

However, bioproducts registered an $111m operating loss compared with a $125m profit a year earlier. In a statement, ADM said this was ``due principally to a significant decline in ethanol margins resulting from sharply higher net corn and increased manufacturing costs, lower average selling prices and inventory write-downs.’’

Rice said despite lower oil prices and the financial crisis, ADM will finish ethanol plants under construction in Cedar Rapids, Iowa, and Columbus, Nebraska. ADM operates other distilleries in Illinois, Iowa, North Dakota and Minnesota.

A federal mandate requiring ethanol use in gasoline and government fiscal incentives accelerated an ongoing push to build plants that use corn feedstock to produce fuel ethanol. The boom also was accompanied by a surge in rail tank car production to transport the additive, although many orders have now been cancelled.

Refiners and fuel blenders this year are required to blend 10.5 billion gallons of ethanol into gasoline under the 2009 U.S. Renewable Fuels Standard. Yearly targets will top out at 15 billion gallons in 2015.

The Obama administration wants to ease dependence on corn as ethanol feedstock, after the surge in ethanol production this decade caused corn prices to skyrocket. That, in turn, pushed up the cost of food and feed for livestock and poultry.