ANR Extension: Connecting with the BioEconomy Charles R. Hurburgh, Jr. Professor of Agricultural Engineering 515-294-8629 [email protected] .

ANR Extension:Connecting with the

BioEconomyCharles R. Hurburgh, Jr.Professor of Agricultural Engineering

[email protected]

March 27, 2007

The goals of the Bioeconomy are:

• Enhanced national security– Reducing dependence on imported

petroleum

• Improved environmental quality– Including mitigation of global climate

change

• Increased markets for agricultural crops– With the benefit of reducing need for

crop support programs

• Advances in rural development– Creating economic opportunities

where the resource is locatedCourtesy USDA NRCS

…and renewable fuels are just one of many possible biobased products

Biobased ProductsAdhesives Motor Fuels

Cleaning compounds

Packaging materials

Detergents Paints

Dielectric fluids Paper

Dyes, pigments & inks

Plastic fillers

Electric power Polymers

Hydraulic fluids Solvents

Lubricants Sorbents

The Midwest will be the leading provider of biomass feedstocks

Source: U.S. DOE

5

Corn Has Significant Potential for Biofuels

Ethanol Productivity Potential

435 Gal/Acre@ 150 bu/ac grain yield

100 Gal/Acre (2010)Stover

18 Gal/Acre (2010)Pericarp

0

200

400

600

800

1000

1200

2006 2010 2015 2020

Stover

Grain Fiber

EndospermG

all

on

s /

Ac

re

1,000 gallons / acre by 2020?

Grain Endosperm

Bu/AcGal/BuGal/Ac

1502.5390

1802.7486

2002.8560

2502.8700

Grain Pericarp

000

.454018

.5006030

.6259056

Stover

000

2.540

100

2.7560

165

390

270

Ton/AcGal/TonGal/Ac

Ton/AcGal/TonGal/Ac

0505 1010 1515 2020

Endosperm

Value Added Agriculture Program

www.iavaap.org


www.iavaap.org

Slide Title

Iowa corn processing & ethanol plants, current & planned, 10/26/06

63

Sac

Linn

Lee

Ida

Tama

Clay Kosuth

Jasper

Lyon

Page

StoryrJones

Fayette

Adair

Bentonn

Wapello

Pocahontas

Osceola

Jefferson

Audubon

Washington

BuenaVista

BlackHawk

Appanoose

CerroGordo

VanBuren

Mucatine

Dickenson

DesMoines

Winnebago

Montgomery

Iowa Corn Processing & Ethanol Plant Locations, Actual & Planned. 9/26/06,

PoweshiekPolk

BooneGreeneCarrollCrawford

Plymouth

O’Brien

Woodbury

Monona

Harrison Shelby

Wright Franklin

Floyd Chickasaw

Webster Hardin

Louisa

Emmet

Palo Alto

Hancock

Worth Mitchell HowardWinneshiek Allamakee

BremerButler

HamiltonGrundy

Buchanan

Delaware

Dubuque

Jackson

Clintonn

Guthrie Dallas

Johnson

Marshall

Pottawattamie

Mills

Fremont

Madison

Warren Marion Mahaska

Keokuk

Adams Union Clarke Lucas Monroe

Taylor Ringgold

Cherokee

Calhoun

Decatur Wayne Davis

Henry

Scott

Humboldt

Clayton

Cedar

Sioux

Cass

Iowa*

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Sac

Linn

Lee

Ida

Tama

Clay Kosuth

Jasper

Lyon

Page

StoryrJones

Fayette

Adair

Bentonn

Wapello

Pocahontas

Osceola

Jefferson

Audubon

Washington

BuenaVista

BlackHawk

Appanoose

CerroGordo

VanBuren

Mucatine

Dickenson

DesMoines

Winnebago

Montgomery

,

PoweshiekPolk


Plymouth

O’Brien

Woodbury

Monona

Harrison Shelby

Wright Franklin

Floyd Chickasaw

Webster Hardin

Louisa

Emmet

Palo Alto

Hancock


BremerButler

HamiltonGrundy

Buchanan

Delaware

Dubuque

Jackson

Clintonn

Guthrie Dallas

Johnson

Marshall

Pottawattamie

Mills

Fremont

Madison


Keokuk


Taylor Ringgold

Cherokee

Calhoun

Decatur Wayne Davis

Henry

Scott

Humboldt

Clayton

Cedar

Sioux

Cass

Iowa*

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Sac

Linn

Lee

Ida

Tama

Clay Kosuth

Jasper

Lyon

Page

StoryrJones

Fayette

Adair

Bentonn

Wapello

Pocahontas

Osceola

Jefferson

Audubon

Washington

BuenaVista

BlackHawk

Appanoose

CerroGordo

VanBuren

Mucatine

Dickenson

DesMoines

Winnebago

Montgomery

Iowa Corn Processing & Ethanol Plant Locations, Actual & Planned. 9/26/06,

PoweshiekPolk


Plymouth

O’Brien

Woodbury

Monona

Harrison Shelby

Wright Franklin

Floyd Chickasaw

Webster Hardin

Louisa

Emmet

Palo Alto

Hancock


BremerButler

HamiltonGrundy

Buchanan

Delaware

Dubuque

Jackson

Clintonn

Guthrie Dallas

Johnson

Marshall

Pottawattamie

Mills

Fremont

Madison


Keokuk


Taylor Ringgold

Cherokee

Calhoun

Decatur Wayne Davis

Henry

Scott

Humboldt

Clayton

Cedar

Sioux

Cass

Iowa*

**

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Sac

Linn

Lee

Ida

Tama

Clay Kosuth

Jasper

Lyon

Page

StoryrJones

Fayette

Adair

Bentonn

Wapello

Pocahontas

Osceola

Jefferson

Audubon

Washington

BuenaVista

BlackHawk

Appanoose

CerroGordo

VanBuren

Mucatine

Dickenson

DesMoines

Winnebago

Montgomery

,

PoweshiekPolk


Plymouth

O’Brien

Woodbury

Monona

Harrison Shelby

Wright Franklin

Floyd Chickasaw

Webster Hardin

Louisa

Emmet

Palo Alto

Hancock


BremerButler

HamiltonGrundy

Buchanan

Delaware

Dubuque

Jackson

Clintonn

Guthrie Dallas

Johnson

Marshall

Pottawattamie

Mills

Fremont

Madison


Keokuk


Taylor Ringgold

Cherokee

Calhoun

Decatur Wayne Davis

Henry

Scott

Humboldt

Clayton

Cedar

Sioux

Cass

Iowa*

**

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66 Planned + current in Iowa

11 Just across the borders

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Figure 1.

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Iowa corn processing & ethanol plants, current & planned, 11/20/06

63

Capacity: 129% of 2006 crop


www.iavaap.org

Current Iowa Dry-Grind plants• Average production

– 60 million gal/yr• 20 mgy – 110 mgy

• Plants produce at 105-110% above rated capacity

• Plants store about 5% ofannual capacityDGS = 2.5%

• Most have outbound rail access• Few (none) have inbound rail access


www.iavaap.org

Iowa Ethanol PlantsSummary Statistics

nEthanol Producedmil gal/yr

Corn Usedmil bu/yr

DGS000 tons/yr

Current Dry-grind Plants

23 1448.0 514.3* 4386.6

Plants, expansions under construction

16 1509.5 524.3 4456.4

Wet Mills 7 1210.0 432.1 3673.2

Nearby, Iowa Draw**

6 402.0 143.6 1220.4

Subtotal Near-Term Use

4569.5 1614.3 13736.6

Announced 33 2975.0 1062.5 9031.3

Total 7544.5 2676.8 22752.7

*Operating at actual capacity, approximately 5-10% over rated capacity.**Plants in bordering counties of other states with 50% use assigned to Iowa corn.


www.iavaap.org

Ethanol plants buy 60% from farmers, want to buy more from farmers.

- Farmers must be prepared to supply over the year, in a managed way.- Will elevators be surge capacity for times when farmers are not delivering

Plants store about 5% of supply- Enough to cover temporary interruptions, no more.- Inbound grain goes right straight through to the process

Plants stored about 2.5% of DGS- Move it or else (<10% of Revenue)


www.iavaap.org

Plants did not care about specialty grains- 100 trucks/day or 200 trucks/day - Means raising the area average and consistency will be more important

Plants had absolute quality limits for US Grade factors – moisture, damage

- Large change in culture for farmers- Means no leeway for storage problems,

- Storing more grain longer.- Storage management will be important.


www.iavaap.org

Ethanol plants load rail but do not unload rail

- Grain from local area- How to manage risk – crop insurance does

an ethanol plant no good.- Increase in truck tonnages on local roads at

all time of the year.

ANR Extension Challenge

• Find and promote a balance among:

- crops and yield goals- crop production practices - processing methods, - plant operating strategies- etc.that still:

ANR Extension Challenge

• Provides efficient feed ingredient supply and competitive advantage for several livestock species.

• Does not add additional water or air pollution.

• Does not increase soil erosion or deteriorate soil quality

• Produces sufficient BioProducts

Economic Drivers

Crop Share Return to Farming (net $/acre)

$-

$100

$200

$300

$400

$500

1985 1990 1995 2000 2005 2010

Year

Crop Share Return to Farming (% return)

0.0

2.0

4.0

6.0

8.0

10.0

1985 1990 1995 2000 2005

Year

Economic DriversCalhoun County Land Values ($/acre)

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Year

Gross Adjusted 1983 = 100

So Many Things Change

• This is a real business that attracts outside capital. Wall Street knows us.


• Decisions change quickly – economics less predictable.

• Much higher risk exposure.• Real money on the table between

landlords and tenants; business practice.

• Logistical and employment issues


• Raw material storage – where and by whom?

• Supply chain discipline• No tolerance for poor quality

materials• Liability for product. Crop insurance

check does not help a processor.• $500/acre will make business more

intense.

Challenges for Extension

• Extension is a support group with only indirect connection to net income.

• Information now!• What’s my job today?• What will we not do any more?• Eliminate redundant activities• Linear management chains

Change = Opportunity

If someone came to GM and wantedTwice as many Silverado pickups

and would payTwice as much per pickup

What would happen?That’s where agriculture is now.

It’s a great time to be in agriculture!

ANR Extension: Connecting with the BioEconomy Charles R. Hurburgh, Jr. Professor of Agricultural Engineering 515-294-8629 [email protected] .

Documents

agriculture programwww

orgethanol plants

orgiowa ethanol plants

actual capacity

anr extension challengefind

iowa draw

inbound grain

rated capacityplants