UPDATE 1-AGP Inc says permanently closing Nebraska ethanol plant

Fri May 17, 2013 5:56pm EDT

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(Updates with quote from spokesman, details on closure)

May 17 (Reuters) - Ag Processing Inc, the U.S. largest farmer-owned cooperative, is permanently closing a Nebraska ethanol plant that had been idled since February, a company spokesman said on Friday.

"It just reflects the general industry trend of difficult economic times for ethanol plants. (Margins) weren't improving and it's just a difficult decision we had to make," spokesman Matt Caswell said via telephone.

The plant in the south-central town of Hastings had an annual capacity of 52 million gallons and was AGP's only ethanol plant, according to the Renewable Fuels Association.

The company purchased the plant in 1994 when it was idled in Jasper, Tennessee. It then dismantled the processor and moved it to Nebraska, where it started operating in 1995.

"It was one of the original ethanol plants and an older-generation technology," Caswell added.

A soybean processor and vegetable oil refinery at the Nebraska location will still operate, the company statement said.

Last summer's drought - the worst in the United States since 1934 - reduced yields for corn, the main feedstock used in ethanol production, and squeezed profits for makers of the fuel additive. (Reporting by Michael Hirtzer in Chicago, editing by G Crosse)

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