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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.

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sourcing iowa corn for ethanol impacts of increased local processing

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

project objectives
Project Objectives
  • 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.
survey design
Survey Design
  • Interviews with plant managers representing 20 ethanol plants
    • Processing capacity and corn storage capabilities
    • Co-products and shipping capabilities
    • Emerging concerns
current iowa dry grind plants
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
production and corn usage
Production and Corn Usage

*Operating at actual capacity, approximately 5-10% over rated capacity.

**Plants in bordering counties of other states with 50% use assigned to Iowa corn.

corn consumption and storage
Corn consumption and storage

Distillers Grains storage

2.62%

corn sources for ethanol plants
Corn sources for ethanol plants
  • 62% of corn is purchased directly from farmers
  • 16 plants purchase >50% of corn from farmers
  • 5 plants tied to local elevators; 60-95% of corn comes from elevator
farm and commercial storage
Iowa has 1.65 billion bushels of on-farm storage (NASS, 2005)

Iowa has 1.08 billion bushels of commercial storage

(IDALS – Grain Warehouse Division, 2006)

Total – 2.73 billion bushels

Plant managers encourage on-farm storage; premiums structured for future delivery (2)

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

Farm and Commercial Storage
corn quality
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% max

Producers must meet #2YC quality spec to sell to ethanol plants. Otherwise, corn is rejected.

corn quality cont
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

slide14
Grain storage and management practices
    • Farm
    • Elevator
    • Ethanol plant
  • Follow the link to storage and management questions.
slide15
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 areavailable

Farm-Elevator-Ethanol

transportation ethanol shipments
Transportation:Ethanol shipments

By Truck

34.7%

By Rail

65.3%

co products carbon dioxide
Co-products – Carbon Dioxide
  • All plants “scrub” CO2 to remove residual alcohol
  • One plant sells CO2 to make dry ice
  • Four plants are negotiating with potential buyers
  • Uses: carbonated beverages, dry ice, flash-freeze meats, paper manufacturing
co products distillers grains
Co-products – Distillers Grains
  • Estimated Distillers Grains production

4.3 million tons (23 dry-grind plants)

  • % of DG that is dried
    • Range: 4 - 94% Average: 75%
    • Avg. moisture 10%
  • % of DG sold wet or modified
    • Range: 6-100% Average: 25%
    • Avg. moisture 56%
transportation co product shipments
Transportation: Co-product shipments

By Truck

44.4%

By Rail

55.6%

co product markets
Co-product markets
  • 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
feedlots per county iowa
Feedlots per county - Iowa

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

Source: Iowa Beef Center, Iowa State University

co product sales
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
emerging uses for distillers grains
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
concerns for the industry
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
summary
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.
summary1
Summary
  • Ethanol 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.
training needs
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
acknowledgements
Acknowledgements
  • Iowa Grain Quality Initiative
  • www.iowagrain.org
contact information
Contact information

Iowa State University Extension

Value Added Agriculture Program

www.iavaap.org or www.agmrc.org

Connie Hardy

Mary Holz-Clause

Iowa Grain Quality Initiative

www.iowagrain.org

Howard Shepherd

Charles Hurburgh