A state fund that helps ethanol producers when they're squeezed by high corn prices will run out of money this month.

Checks written next week to Red Trail Energy, Blue Flint Ethanol and VeraSun Hankinson will empty that account, and it will probably be another six months before the fund has enough money for more payments.

The three qualify for the quarter of July through September. The price of corn went through the roof at nearly $6 a bushel and, along with a flat price for ethanol at $2 a gallon, created "a perfect storm to create the need to access that fund," said Randy Schneider, president of the North Dakota Ethanol Producers Association.

Any producer can only get $1.6 million a year.

The differential between corn and ethanol was so severe that VeraSun is eligible for an entire year's payment from that quarter alone, and the two others nearly are.

Shane Goettle, director of the Commerce Department that oversees the fund, said there isn't enough in the fund to give the three the full amount for which they're eligible. Instead, he'll apportion the remaining $2.4 million based on their production.

Goettle said the Legislature created the fund in 2005 by diverting farm vehicle registration revenue and a trickle of ag fuel refunds to help start-up plants in a volatile industry. Plants have a lifetime limit of $10 million.

"It's enough to keep the plant open, but not enough for profit. It goes into effect when they're getting squeezed between the price of corn and the price of ethanol," Goettle said.

When it's gone, it's gone, and future payments will await revenue deposits, he said.

The biggest check of about $950,000 will go to VeraSun because it had the most production in July through September. The Red River Valley plant, among the largest in the country, has only been on line since June and was acquired by Verasun in a merger with U.S. BioEnergy LLC before filing for Chapter 11 debt restructuring on Oct. 31

Blue Flint and Red Trail reached their cap payment of $1.6 million last fiscal year when they were the only plants getting payments.

Now, starting with a new fiscal year and with VeraSun's eligibility added to the equation, they'll get between $700,000 and $800,000 for the quarter.

Schneider said none of the plants want the payments, though they are critical to their operations.

Corn prices for December are less than $3 a bushel, and Schneider said he's hopeful the future will be better

"It gives me no pleasure to ever use that fund for any plant in North Dakota," he said. He said the plan is to tell the Legislature, "Thanks, we hope it stays," but not ask for it to be expanded.

He said a better solution is a higher gasoline blend of 15 percent ethanol and more support for renewable fuels.

(Reach reporter Lauren Donovan at 888-303-5511 or lauren@westriv.com.)