Sourcing Iowa Corn for Ethanol: Impacts of Increased Local Processing. Iowa Grain Quality Initiative Advisory Committee January 12, 2007 Connie Hardy Survey conducted by: ISU Extension Value Added Agriculture Program Sponsored by: ISU Extension Iowa Grain Quality Initiative. - PowerPoint PPT Presentation
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Value Added Agriculture Program
www.iavaap.org
Sourcing Iowa Corn for Ethanol: Impacts of Increased Local Processing
• Create a data set to define the scope and variation involved in the current industry activities surrounding grain origination methods, impact on grain storage and co-product handling/marketing.
• Measure impacts of growth on the ethanol industry and on its input supply chain.
Value Added Agriculture Program
www.iavaap.org
Survey Design • Interviews with plant
managers representing 20 ethanol plants– Processing capacity and
corn storage capabilities– Co-products and shipping
capabilities– Emerging concerns
Value Added Agriculture Program
www.iavaap.org
Value Added Agriculture Program
www.iavaap.org
Current Iowa Dry-Grind plants
• Average production– 60 million gal/yr
• Range– 20 mgy – 110 mgy
• Plants produce at 105-110%
above rated capacity• Most have outbound rail access• Few (none) have inbound rail access
Value Added Agriculture Program
www.iavaap.org
Production and Corn UsageSummary 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 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.
– On-farm storage less likely to be built where cash rented land is prevalent
– Plan to include questions about on-farm storage in Iowa Rural Life Poll in 2006-7
Value Added Agriculture Program
www.iavaap.org
Corn Quality
• US Grade #2 Yellow Corn - no premium for better quality or special traits
• Moisture limit: 17% (a few take 18%)• Test Weight low limit: 54 lb/bu• Damage limit: 10% (discount from 5%)• Broken Corn: 12% maxProducers must meet #2YC quality spec to sell to
ethanol plants. Otherwise, corn is rejected.
Value Added Agriculture Program
www.iavaap.org
Corn Quality (cont.)
• Starch and oil measurements are taken by 15 plants, but none use a quality spec for starch and oil
• Nutrients are measured by some plants to predict levels in DGs
• Mycotoxin testing done on as-needed basis by most plant 12 plants; 10 plants test every load
Note: nutrients and mycotoxins concentrate in distillers grains
Value Added Agriculture Program
www.iavaap.org
Grain Storage and Management Practices Training Model
Grain Storage Challenges --- Supplying the Ethanol Industry
Farm ElevatorEthanol
Plant
CommercialCommercialNo Yes
Condominium
Conventional
7 to 14 Days
Conventional
No
SellStoreBuildTemporary
Yes
How much neededKind of capacityKind of drying
How
Meets delivery cycle
Build new
How much neededKind of capacityKind of drying
GEAPS 520 Training
Value Added Agriculture Program
www.iavaap.org
• Grain storage and management practices
– Farm
– Elevator
– Ethanol plant
• Follow the link to storage and management questions.
Value Added Agriculture Program
www.iavaap.org
• Farm – Grain Storage• Do I have storage?
• No• Need to build storage?
• Yes- How much is needed- What kind of capacity is needed- Do I need drying capabilities- Do I need delivery capacity
- What economic tools are available
Farm-Elevator-Ethanol
Value Added Agriculture Program
www.iavaap.org
Transportation: Ethanol shipmentsEthanol shipments by Rail and Truck
• Wet distillers grains sold within 50-mile radius• Dried distillers grains go to:
– Feedlots in Texas, Kansas, Nebraska, Mexico– Dairies in California, Arizona, and East Coast– Export
• Nutrient variability of DG is common – Between plants and within plants– Need a consistent measurement system
Value Added Agriculture Program
www.iavaap.org
Feedlots per county - Iowa
Source: Iowa Beef Center, Iowa State University
Depending on the rate of DG inclusion in cattle diets, it would take between 4 and 12 ethanol plants to provide enough DG for approximately 1,000,000 cattle on feed.
-John Lawrence
Value Added Agriculture Program
www.iavaap.org
Co-product sales• Plants use in-house sales staff and/or brokerage
firms to sell distillers grains• Long-term booking arrangements are becoming
more common (3-12 months)• 13 encourage long-term contracts• One plant sells DG only on spot market
Value Added Agriculture Program
www.iavaap.org
Emerging uses for Distillers Grains
• Feeds (poultry, swine, goats, sheep, horses, aquaculture, pet foods)
• Energy source for plant• Fermentation for additional ethanol• Chemical and pharmaceutical • Food• Fertilizer
Value Added Agriculture Program
www.iavaap.org
Concerns for the industry
• Corn acquisition at an affordable price• Adequate rail service for products and co-products• Markets for distillers grains• Consistent nutrient content in distillers grains, also
flowability • Too few trained employees
– Engineers for management positions– Technicians with life sciences/electrical training
• Increasing environmental regulations
Value Added Agriculture Program
www.iavaap.org
Summary Iowa ethanol production currently uses 44% of Iowa’s
corn crop and will use 75% of the crop by 2008. By 2010, planned expansions and new plants could
produce 7.4 billion gallons per year of ethanol and 22.4 million tons of DGs, using 2.6 billion bushels of Iowa corn
Increasing supply of DGs encourage increased livestock production, particularly cattle and dairy.
Ethanol plants seek qualified professional and technically trained employees.
Value Added Agriculture Program
www.iavaap.org
SummaryEthanol plants want to buy from farmers (>60%),
and they store <5% of annual corn inventory.Plants seek corn in good condition and have low
tolerance for poor quality (reject)Producers must plan to store more corn for
longer periods in good condition. Important traits: Storage, drydown,
consistency!Plants generally have less DG storage (2.6%)
and seek increasing markets for DGs and CO2.
Value Added Agriculture Program
www.iavaap.org
Training needs
• Increased corn production• On-farm grain quality management and storage• Technical training for processing employees• Evaluation of distillers grains quality• Feed uses of distillers grains
Value Added Agriculture Program
www.iavaap.org
Acknowledgements
• Iowa Grain Quality Initiative
• www.iowagrain.org
Value Added Agriculture Program
www.iavaap.org
Contact informationIowa State University Extension
Value Added Agriculture Programwww.iavaap.org or www.agmrc.orgConnie HardyMary Holz-Clause