VeraSun Energy - Research Paper Example

In order to produce biodiesel from dried distillers grains, VeraSun energy has begun some units in Aurora and South Dakota recently. The major biodiesel product of VeraSun energy is E85, a blend of 85 percent ethanol and 15 percent gasoline for use in Flexible fuel vehicles (FFVs). E 85 is marketed under the trade name VE 85. The company has around 150 VE85 retail locations fifteen American states. VeraSun energy company holds many “industry firsts” in its category such as: the first 100 million-gallon-per-year dry-grind production facility, the countrys first branded E85, VE85®; the first ethanol producer to form strategic alliances with Ford Motor Company, General Motors, and Enterprise Rent-A-Car to increase awareness and availability of E85, and the first company to place an E85 retail station in the Washington D.C. metro area etc (VeraSun Energy).

Even though at the beginning, VeraSun Energy created lot of waves in the energy market, currently it is facing many challenges. In fact it is struggling for survival now. This paper briefly analyses the challenges faced by VeraSun Energy and possible solutions to overcome these challenges. Steil (2008) has mentioned that “VeraSun Energy has filed for bankruptcy. Its the latest in a series of problems for ethanol producers, whove had to deal with huge swings in corn costs and falling ethanol prices”(Steil).

Because of the global recession, the company has faced many challenges in 2008. The demand for its product has come down drastically whereas the prices of the raw materials increased a lot. Corn is the major raw material used by VeraSun Energy to produce bio fuels. The fluctuations in corn prices caused big problems to VeraSun Energy. The company placed bets in heavy amounts on rising prices of corn. But because of the unexpected recession, the corn prices have fallen down and the company faced many challenges.

Because of