It's pretty easy to figure out. The industry is in trouble now, but ADM is counting on the government to boost the alternative fuel requirement even more going forward. Since corn-based ethanol is the only "alternative fuel" being made in any significant volume, ADM figures it will ride out the current downturn and cash in down the road.

And ADM can indeed ride out a downturn. It sits on a cash hoard of some $2 billion; many of the troubled ethanol plants it's eyeing are owned by farmer cooperatives that don't have nearly those resources. So ADM can use gluts like the current one to snap up plants at pennies on the dollar, and consolidate its grip over the industry as the government ramps up alternative-fuel requirements.

I take no pleasure in saying it, but I and other observers have seen this coming for years now. Commenting on the boom in farmer-owned ethanol plants back in March 2005, I wrote that in the case of a glut:

[A]ll ADM would have to do is sit back and wait for the small fry to fail before regaining its old dominance. Thus a farmer who bets $20,000 on getting a nice cut of the ethanol action is playing a risky game. The house always wins at blackjack.

And last October, as ethanol euphoria swept the Midwest and profit margins were fat, I wrote that:

What we're looking at is the dirtiest four-letter word in the energy lexicon: glut. Which players in the market are the likeliest to fail if ethanol prices dip below the cost of production? Small fry like farmer-owned cooperatives. And what deep-pocketed player is likely to ride out the storm, then snap up a bunch of failed ethanol plants for pennies on the dollar? Well, that would likely be the biggest producer of all: Archer Daniels Midland. And what happens when ethanol production falls after a bunch of plants shut down? The price of corn drops, and farmers are right back where they started.

It sucks to watch a train wreck in slow-motion progress. I'd like to hear what boosters of the farmer-owned ethanol trend, like David Morris of the Institute for Local Self-Reliance, think about all of this.

Need I add that ethanol delivers, at best, a mind-numbingly tiny environmental advantage over gasoline, and may even be worse?