USDA to help ethanol plants look for efficiencies

WASHINGTON, Jan 26 (Reuters) - The U.S. Agriculture Department will help the struggling ethanol industry identify the most efficient ways to produce the alternative fuel, so more plants can stay afloat, Agriculture Secretary Tom Vilsack said on Monday.

The USDA should research, develop and promote "best practices" to improve efficiency at corn-based ethanol plants, which have been hit hard by volatile corn prices, followed by a sharp drop in demand for the biofuel, which is more expensive than gasoline, Vilsack said.

"We need to make sure that the biofuels industry has the necessary support to survive the recent downturn," Vilsack told reporters.

Last week, Panda Ethanol Inc PDAE.OB filed for bankruptcy for a plant it owns in Texas, the latest in a string of ethanol makers that have faced problems.

VeraSun Energy Corp VSUNQ.OB, the second-largest U.S. ethanol producer, filed for bankruptcy protection in October, and has closed 12 of its 16 plants.

The USDA also needs to speed up work on biofuels made from non-food plant sources, Vilsack said, as well as wind energy and other renewable sources of power.

The 2008 farm bill has several measures that should be quickly implemented to boost demand for new types of biofuels, he said, including tax credits, grants and loans for expanding plants and converting them to use new feedstocks. (Reporting by Roberta Rampton; Editing by Walter Bagley)