Domestic Fuel

Iowa State University is conducting a survey of livestock producers use of feed-related co-products from ethanol production (distillers grains). The survey is focused on the beef, dairy, swine and poultry sectors. It is being funded by a coalition consisting of the Renewable Fuels Association, the Distillers Grains Technology Council and the Corn Utilization Councils from Iowa, Illinois and Nebraska.

“The feedback gained from the survey will be used to help improve co-product quality, which can help livestock producers with their feed costs and livestock performance,” said Kurt Rosentrater, a professor of agricultural and biosystems engineering, who is leading the effort.

Livestock producers are invited to take the survey online until June 19, 2013.

The ethanol by-product and livestock feed known as distillers dried grains with solubles (DDGS) is now officially recognized as a non-hazardous cargo by the International Maritime Organization (IMO).

The official IMO classification became final and mandatory under the code of the International Maritime Organization on Jan. 1, 2013, after action by the U.S. Grains Council on behalf of its member organizations like the National Corn Growers Association (NCGA).

“While DDGS have effectively been shipped as a non-hazardous cargo for years now, the final classification by the IMO is an important success which will benefit corn farmers across the country,” said NCGA President Pam Johnson. “This status provides additional assurance that DDGS buyers and producers can access the lower freight rates assessed for non-hazardous cargo. U.S. farmers work diligently to ensure at every point in the process that we continue to provide the stable, consistent, quality product that our export markets expect.”

The classification provides savings in the form of lower freight costs which, in turn, increase the return to ethanol plants producing the high quality feed ingredient. Exports of DDGS from the United States have increased tremendously in recent years.

According to a new study released by the Missouri Corn Growers Association (MCGA), the state’s corn and ethanol industries are adding to the state’s bottom line. The study, conducted by the University of Missouri Commercial Agriculture Program, reported that the corn and ethanol industries injected $12 billion into Missouri’s economy from 2000 to 2011. Each year, the state’s ethanol industry utilizes around 100 million bushels of corn to produce nearly 300 million gallons of ethanol and 825,000 tons of distillers grains, a high protein livestock feed. In 2011, Missouri corn production alone added over $1 billion in value to the state’s economy and together the two industries supported 67,000 jobs.

“This research substantiates the tremendous economic benefits corn and ethanol production bring to Missouri,” said MCMC Chairman Jim Stuever, a corn grower from Dexter, Mo. “They are significant drivers for the state by creating jobs, generating tax dollars and increasing vitality of rural communities.”

Over the 12 years studied, the combined benefits to the state’s economy from the corn and ethanol industries were:

• $12 billion in economic value,

• $5.3 billion in labor income, and

• $2.2 billion paid in local, state and federal taxes.

“This is truly a success story for agriculture and the state of Missouri,” noted MCGA President Rob Korff, a corn farmer from Norborne, Mo. “The state’s ethanol industry was built on the faith and dedication of hardworking farm families and support from state leaders.”

During the 12-year period, the ethanol industry yielded a 6:1 return, a net value of over $600 million, on the state’s investment. According to the study, Missouri’s six majority farmer-owned ethanol plants alone generated the following direct and indirect benefits to the state: $734 million in economic value; $416 million in labor income; and $174 million in local, state and federal taxes.

Dyadic International has received its 12th patent, U.S. Patent No. 8,304,212 entitled “Methods and compositions for degradation of lignocellulosic material”. The patent covers methods and compositions for using enzymes mixtures to convert plant biomass into fermentable sugars for the production of various products. The patent also covers novel combinations of enzymes including those that provide a synergistic release of sugars from plant biomass.

“In developing and selling industrial enzymes, our customers and partners not only benefit from Dyadic’s patented C1 platform technology but also from Dyadic’s fungal strains and technologies based on the Trichoderma fungal organism,” said Dyadic’s President and CEO, Mark Emalfarb. “Dyadic uses these strains to produce specialty enzymes that can be used for a variety of applications in such fields as animal health and nutrition, biofuels and bio-based chemicals. As with our growing portfolio of patents covering the C1 technology, this patent will provide Dyadic, its customers and licensees with additional protection for our Trichoderma-based enzyme mixtures.”

The patent also specifically describes methods of increasing the yield of fermentable sugars from fermentation of dried distillers grains (DDGs) using enzyme mixtures comprising glucoamylase, beta-glucosidase and alpha-arabinofuranosidase. More specifically, it specifically covers Trichoderma-based enzyme mixtures, which significantly and unexpectedly increase the yield of fermentable sugars from DDGs. DDGs are obtained after the fermentation of the starch derived from a number of grains including corn, wheat, barley, oats, rice, and rye and are typically used for animal feed. DDGs are also a byproduct of ethanol production which creates synergies in using enzymes for both biofuels and animal feed applications.

A group of 17 farmers from Canada, Honduras, India, Mexico, New Zealand, Philippines, South Africa, Swaziland, United Kingdom, Uruguay, US, Zambia, and Zimbabwe had the chance to visit a livestock operation with an ethanol plant next door.

The annual Global Farmer Roundtable, organized by Truth About Trade & Technology (TATT), makes Couser Cattle Company a regular stop for the international farmers each year. TATT Chairman Emeritus Dean Kleckner, former president of the American Farm Bureau Federation, is a big supporter of ethanol himself. “I’m a believer in ethanol from corn,” said Kleckner during an interview at World Food Prize, where the roundtable is held each year. “The corn that is used for ethanol, a lot of that comes back to farmers in the form of distillers grains.”

Couser Cattle Company owner Bill Couser was instrumental in starting the farmer-owned Lincolnway Energy ethanol plant in Nevada, Iowa, which is located next to his operation so he can take full advantage of using distillers grains as feed for his livestock.

Distiller grain production was a hot topic discussed throughout the 2012 Export Exchange. Dr. Bob Wisner, Agriculture Extension Economics at Iowa State University, shared his research on the future of DDGS and what we can expect in the coming years. He also spoke on how this years drought affected DDGS production and it’s long-term affect on our US supply.

“The biofuel industry has expanded extremely rapidly in the last six years. It has become a major feed ingredient domestically and in the international market. Here in the United States it’s marketed in several different forms. We have dried distiller grains, that are dried to 10% moisture. We have a modified distiller grain that is partially dried. We have a wet distiller grain that is especially useful in the beef feeding industry. It gives a higher feed conversion efficiency versus corn than dry distiller grains. We have quite the combination of alternative uses here in the United States that for those of you outside the US are not generally available.”

“This is the first year in the last 17 years that we have seen a significant decline in distiller grain production. That of course is being driven by the severe drought here in the United States.”

In conclusion, Dr. Wisner shared these major things that will determine the supply and demand of DDGS.

• DDGS production follows ethanol production level and corn cost.
• Prices as % of corn/sbm price higher than in the past: 105%-108% of corn this winter.
• Prices for all feeds including DDGS will be extremely sensitive to South American weather in the next 4 months.
• After the current marketing year, with a return to more normal US crop yields, DDGS supplies will likely resume a longer-term uptrend, but at a slower rate than in the last six years.
• Risk of US domestic DDGS market saturation is low.
• DDGS exports likely will be growing competitor with the domestic feed industry.
• Longer-term future production and use depends heavily on policy issues and fuel prices.
• Important emerging issue: Will oil removal from DGS impact the value by species?

Listen to Dr. Bob Wisner’s complete presentation here: Dr. Wisner at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange

Grain buyers from around the world in attendance at the 2012 Export Exchange had the opportunity to embrace the US producers perspective on the 2012 crop through a producer panel during the opening general session. Key panelists were Ron Gray, Illinois farmer and Secretary/Treasurer of the US Grains Council, and John Mages, Minnesota farmer and Chairman of the Minnesota Corn Research & Promotion Council.

They shared their personal experiences overcoming the 2012 drought and assured buyers of their fight and passion to raise a consistent and quality product.

Listen to the entire Producers Panel here: Producer Panel at Export Exchange

Following the opening session I took the time to talk with Ron Gray, where he summed up the 2012 corn crop and how farming for him is more than a job, its a personal endeavor.

“For us the 2012 crop started out with all the hope of an extraordinary crop. We planted early, the crop went in very well, emergence was good. Then it didn’t rain. Beginning the second week of May through the first week of August we only had about three inches of total rainfall and because of that our corn crop was severely reduced in production. Our farm probably averaged 50 bushels an acre, which is approximately 1/3 of our normal production. The rainfall did come later and the soybean crop is a fairly good crop, but the corn crop was devastated.”

Listen to my interview with Ron here: Ron Gray Interview

Beyond simply listening to producers, international grain buyers had the opportunity to visit farms across the United States. The goal was to gain information, assess the current US corn crop, explore the availability of other grains such as sorghum and barley, and build relationships leading to future sales.

Many participants expressed a preference for buying US grains due to the consistency and quality of the grain. They also appreciate the transparency and reliability of the US marketing and delivery systems. Clearly price and availability hindered US exports this year, but buyers are looking forward to a better crop next year.

You can find photos from this years Export Exchange here: 2012 Export Exchange

The key purpose for the 2012 Export Exchange was for buyers and sellers to meet and establish important relationships. The event sponsored by the US Grain Council and Renewable Fuels Association focused on getting answers, making contacts and building business. During the conference I had the opportunity to talk with Tom Sleight, President & CEO of the US Grains Council, about what this event means for the DDGS and the worlds grain supply.

“What we’re telling customers around the world is how the US producers will be there for them. The US farmers will be there for them now and in the future. Yes, we have droughts, thats a problem we have, but for the future the US has always responded to production challenges with more acres, greater production. Our message to the international community is that the US farmer is there in the international market for keeps.”

“I think out biggest thing is being all around, having boots on the ground, representatives that are selling these grains, bringing the buyers in. That’s what we are doing today with over 200 buyers from around the world. Bringing them in, making contacts and making sales. It is a different kind of business and it takes being there and extending your influence and representing producers interest all around the world. That’s what US Grains Council is doing.”

Listen to my entire interview with Tom here: Tom Sleight at Export Exchange

The US Grains Council also announced the official approval of the Syngenta corn variety MIR 162 Agrisure Vipterra in the European Union. This opens the way for exports of US corn co-products, including DDGS and corn gluten free.

Cary Sifferath, USGC senior regional director based in Tunis, said “This approval is a great success as it opens the window of opportunity for U.S. products, including DDGS and CGF, to enter the EU market. This is especially attractive in big markets like Ireland, Spain, Portugal and the Netherlands. Their ability to import these high-protein feed ingredients is critical at a time of crop shortage in Europe and high prices. Everyone is looking for alternatives,”

You can find photos from this years Export Exchange here: 2012 Export Exchange

The 2012 Export Exchange is coming up next week in Minneapolis, the second event of its kind co-sponsored by the U.S. Grains Council and the Renewable Fuels Association to bring together buyers and sellers of grains and livestock feed, including the ethanol by-product distillers dried grains with solubles or DDGS.

“The Export Exchange is a fabulous opportunity for customers to get together with suppliers internationally,” says RFA president and CEO Bob Dinneen. “We’ll have more than 300 countries represented. There will be users of distillers dried grains from China to Europe to South America. Just about every ethanol producer – or I should say DDGS producer – will be in attendance.”

RFA VP of Research and Analysis Geoff Cooper says about 25% of the distillers grains that have been produced by U.S. ethanol plants in the last several years has been exported. “Last year we shipped distillers grains to more than 50 countries, so it’s really become a huge component of the global feed market,” he said, noting that if the supply of distillers grains was a nation’s corn crop, it would rank as the fourth largest in the world behind the U.S., Brazil and China.

While DDGS output has decreased this year as ethanol production has slowed down as a result of the drought, Cooper says we are still seeing very strong demand for distillers grains because it is priced lower than corn but provides more nutrition and energy value for livestock and poultry.

Domestic Fuel reporter Jamie Johansen will be covering the event and she interviewed both Dinneen and Cooper for a preview. Listen to or download those back to back interviews here: Export Exchange Preview

On the eve of the deadline for providing comments to the Environmental Protection Agency on the Renewable Fuel Standard (RFS) waiver request, the ethanol industry has released a new study that indicates a waiver could actually increase the cost of feed for livestock and poultry producers.

The analysis, conducted by Cardno-ENTRIX and commissioned by the Renewable Fuels Association (RFA), finds that if a waiver of the RFS resulted in reduced biofuel output, the minor reductions in corn prices would be partially or fully offset by increased prices for other feed ingredients like distillers grains (DDGS) and soybean meal, according to a release from RFA.

“When viewed in the context of changes in the prices for other key feed ingredients such as distillers dried grains with solubles (DDGS) and soybean meal, the change in total net feed costs for livestock, dairy and poultry feeders would either increase slightly or decrease by a negligible amount if a waiver was granted,” according to the study, conducted by economist John Urbanchuk. “This is due to the fact that if a waiver reduced biofuel output, it would also reduce the available supply of DDGS and soybean meal, which would naturally lead to higher prices for those key feed ingredients.”

These results are corroborated directionally by a recent study by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. FAPRI found a 1.3 percent reduction in ethanol output under a waiver could lead to slightly higher distillers grains and soybean meal prices. According to FAPRI, “Lower corn price means lower feed costs for livestock producers, unless offset by slightly higher soybean meal and distillers grains prices.”

Cardno-ENTRIX RFS analysis

Thursday, October 11, is the deadline for providing comments to the Environmental Protection Agency on the Renewable Fuel Standard (RFS) waiver request and stakeholders are urged to make their voices heard before the end of the day tomorrow. More information on how to make comments to EPA can be found at ChooseEthanol.com.

According to research conducted by a team from the Department of Animal Science at the University of Nebraska, cattle feed of treated corn stover mixed with distillers grains (DDGS) from ethanol plants can reduce feed costs for cattle feeders. The goal of the research is to continue to provide livestock feeders with options for optimizing feeding efficiency.

The current project included a pretreatment for corn stover, calcium hydroxide, designed to enhance digestibility. The calcium is needed by cattle in feedlot diets. When combined with DDGS, treated corn stover increases digestibility and creates a more efficient feed ration. The research shows that this feed mix offers the livestock industry another feed option.

Nebraska is one of the largest ethanol producing states in the country and a by-product of ethanol production is high-protein distillers grains. When combined with poor quality roughage, researchers say, the feed ration still provides excellent results. This is especially important in drought years, such as this year, as availability of distillers grains have provided a valuable option for livestock feeders.

The evolving University of Nebraska research suggests that the practice of using an alkaline pretreatment on corn residues may offset corn in feedlot diets. This practice is expected to receive close attention by livestock feeders who may wish to offset corn use in livestock diets with other feed ingredients that are less expensive but in some cases more efficient.

Secretary of Agriculture Tom Vilsack held a town hall meeting at World Dairy Expo in Madison, Wisconsin this week and took questions from the audience, one of which concerned ethanol and the impact it has had on livestock producers.

The questioner, who was from California, said ethanol was “not a very popular word” with dairy farmers in her state. “Where I come from ethanol is not a four letter word,” Vilsack responded, noting that ethanol has not only helped increase profitability and production for farmers but also helped the economy, national security, and the environment. “Those are the benefits – jobs, higher incomes, lower gas costs, environmental benefits and reduction of our reliance on foreign oil,” said Vilsack.

The secretary also carefully explained that because ethanol returns livestock feed to the market in the form of distillers grains (DDGS). “We hear a lot of people say that 40% of the corn crop is being used for fuel production but it’s not really 40% because a third of it comes back in DDGS which is used by the livestock industry,” he said. “So, it’s less than 40%, more like 27 percent.”

In addition, Vilsack talked about how USDA is helping the industry move into the production of advanced ethanol using feedstocks beyond corn. “We have financed at USDA nine separate biorefineries that use corn stover, algae, switchgrass, woody biomass, agricultural waste, municipal waste,” he said.

Vilsack also defended the Renewable Fuel Standard (RFS) and the current request before EPA to waive that standard, noting that Congress passing a new food, farm and jobs bill would do more to help livestock producers impacted by high feed costs due to the drought than waiving the RFS would.

Listen to or download Vilsack’s comments here: Ag Secretary Vilsack on ethanol at Dairy Expo

The Iowa Renewable Fuels Association (IRFA) has released a Top 10 list of efficiency and technology innovations of the past decade. IRFA Vice President and Absolute Energy CEO Rick Schwarck noted that while a lot has been written about the ethanol and biodiesel industry since the passing of the Renewable Fuel Standard in 2005, not enough focus has been on improvement in efficiency and technology innovations. The Top 10 list is a way of highlighting breakthroughs that have enabled the renewable fuels industry to persevere in challenging economic times, added Schwarck, while still producing low cost, high performance motor fuels.

Top 10 Efficiency & Technology Innovations Over the Past Decade (click on the link to learn more about each number):

1. Corn Production Gains: In 2001, the U.S. harvested 9.5 billion bushels of corn from 69 million acres, for a yield of 138 bushels per acre. In 2011, 12.4 billion bushels of corn were harvested from 84 million acres, resulting in a 147 bushels per acre yield.

2. Ethanol Yield Increases: Since 2001, the average ethanol yield in the U.S. has increased 3-5 percent to roughly 2.8 gallons per bushel.

3. Water Utilization Improvements: Over the past decade, water use in dry mill ethanol plants has dropped from 4.7 to 2.72 gallons of water per gallon of ethanol produced.

4. Energy Efficiency Advancements: Compared to 2001, ethanol production today requires 28 percent less thermal energy (from natural gas or coal) per gallon and 32 percent less electricity per gallon.

5. Lower Cost Feedstocks for Biodiesel Conversion: With roughly 80 percent of the cost of biodiesel production tied up in feedstocks, technology advancements that have made it possible to convert lower cost waste oils and fats into biodiesel have given producers much-needed feedstock flexibility to manage costs and maximize competitiveness.

6. Corn Oil Extraction: This process, whereby oil is mechanically spun out of distiller grains, was nonexistent in 2001 but is now adding value to approximately 80 percent of dry mill ethanol plants.

7. DDGS Enhancements: Ethanol producers learned how to lower the starch and sugar content of the dried distillers grains (DDGS), and advanced process controls have allowed DDGS to be dried more precisely, assuring a more consistent product.

8. New Catalysts for Biodiesel Production: Catalysts reduce the time and enhance the level of biodiesel conversion.

9. Advanced Process Controls: The adoption of Advanced Process Controls (APC) has brought a new level of precision to renewable fuels production.

10. Unit Train Utilization: Today ethanol’s most common mode of transportation is 80-100 car unit trains that power directly from an ethanol plant to the final destination.

New data has been released from the Energy Information Administration (EIA) regarding ethanol production data that averaged 796,000 barrels per day (d/d) or 33.43 million gallons daily. This is down 6,000 b/d from the previous week. The four week average ethanol production is 819,000 b/d for an annualized rate of 12.55 billion gallons.

Gasoline demand for last week averaged 363.7 million gallons per day while ethanol stocks remained at 19 million barrels. Ethanol production represented 9.19 percent of daily gasoline demand. Year-to-date U.S. ethanol export data implies annualized export demand of approximately 900 million gallons.

Ethanol producers used 12.069 million bushels of corn to produce ethanol and 88,836 metric tons of livestock feed of which 79,198 metric tons were distillers grains. The rest is comprised of corn gluten feed and corn gluten meal. In addition, ethanol producers were providing 4.15 million pounds of corn oil daily.

U.S. ethanol production is the lowest its been in nearly two years, and exports are continuing to drop.

According to the latest Energy Information Administration data, ethanol production averaged 821,000 barrels, or just under 34.5 million gallons, per day the week ending July 6. That is down 36,000 barrels per day from the week before and is the lowest weekly output figure of the year, in fact, the lowest since this time in 2010. Stocks of ethanol stood at 19.5 million barrels, the lowest since January.

U.S. exports of ethanol of all types totaled 58.6 million gallons (mg) in May, down 21% from April and the lowest level since August 2011. Exports of denatured ethanol for fuel use accounted for most of the May shipments, totaling 46.7 mg. Exports of undenatured ethanol for fuel use in May totaled 11.3 mg. Canada was the top destination, followed by the United Kingdom, and Finland. Notably, Brazil did not import any U.S. ethanol in May.

However, May U.S. distillers grains exports were up 25% from April, reaching the highest level since November 2010. Exports totaled 761,470 metric tons (mt) in May, with China accounting for 253,437 mt. Notably, in May, Chinese ethanol producers withdrew their complaint alleging dumping of U.S. DDGS and the Chinese government abandoned its anti-dumping investigation in June.