Domestic Fuel

This edition of “The Ethanol Report” features comments from Renewable Fuels Association (RA) President and CEO Bob Dinneen and U.S. Grains Council (USGC) CEO and president Tom Dorr about promoting exports of the ethanol co-product distillers dried grains with solubles (DDGS).

The two organizations are working together on the upcoming “Export Exchange” conference that will focus on increasing U.S. exports of DDGS. “This is going to be an opportunity for two and a half days in which people can get together, meet with buyers, meet with producers, listen to nutritionists, analysts and others explain the value of how to use and how to access these products,” says Dorr.

Dinneen says exports are critical because the industry has already hit “a feed wall” when it comes to use of DDGS in the domestic livestock industry. “While domestic markets for DDGS continue to expand, quite frankly we’ve grown that market pretty rapidly over the last several years and the opportunity for continued expansion domestically are fewer and farther between.” That’s why RFA believes the conference is a must-attend event for ethanol producers. “Because DDG marketing is so important to the bottom line of an ethanol producer. About 40 percent of your feedstock costs can be recovered in the marketing of DDG,” Dinneen said.

The Export Exchange is being held October 6-8 at the Hyatt Regency McCormick Place Hotel in Chicago, Ill. More information and registration is available on-line here.

Listen to or download the Ethanol Report here: Export Exchange Ethanol Report

Distillers grains exports are hitting new highs.

Exports of the ethanol co-product distillers dried grains with solubles (DDGS) hit a new record in July of 886,300 metric tons – which is more than was exported in the entire year in 2004. Total exports this year so far are 4.95 million metric tons, getting close to the total last year of 5.65 million.

Geoff Cooper, VP of Research with the Renewable Fuels Association (RFA), says 2005 was really the first year that DDGS exports started to take off. “2005 was the first year that we exported more than one million metric tons and the growth has been very rapid since then,” Cooper said. This year, the U.S. ethanol industry is on pace to export 8.5 million metric tons of DDGS, or about 28% of expected total DDGS production.

One third of the nation’s ethanol production ends up as DDGS, a high quality animal feed which can be used for everything from cattle to fish, and livestock producers in other countries have been quick to see the advantages of feeding the protein rich product to their animals. Cooper says the U.S. Grains Council (USGC), along with other companies and organizations, have been promoting those advantages to help exports grow.

“Education is what’s going to sell your product,” said Cooper. “And we are seeing the fruits of that work in dramatically increased exports.”

The upcoming Export Exchange, co-sponsored by USGC and RFA, is an effort to continue that dramatic growth in DDGS exports. “That conference is meant to bring potential buyers of US distillers grains to the United States to have them learn as much as they can about the ethanol industry and the co-products that come out of the ethanol industry,” he said. “The goal is just to get them up to speed on distillers grains and open their eyes to the fact that it is a very economically option for them in terms of feeding their animals.”

The Export Exchange is being held October 6-8 at the Hyatt Regency McCormick Place Hotel in Chicago, Ill. More information and registration is available on-line here.

Listen to or download my interview with Geoff Cooper here: Geoff Cooper Interview

The upcoming Export Exchange 2010 is shaping up to be a must-attend event for anyone involved in the production of ethanol who also produces the co-product dried distillers grains with solubles (DDGS), which is becoming a major export commodity from the United States.

The Export Exchange, sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC), features an array of international leaders in ag commerce, including Dr. Bob Thompson with the National Center for Food and Agricultural Policy and Gary Blumenthal, president and CEO of World Perspectives Inc.

Dr. Thompson is scheduled to deliver the keynote address on the first day of the conference to provide perspective and insight on the world supply and demand situation will give attendees a better understanding of the world market. Blumenthal’s remarks during the second day luncheon will focus specifically on the growing global demand for U.S. DDGS. “As long as global population continues to grow, the demand for meat, milk and eggs will increase, and subsequently the demand for livestock and thus for DDGS will climb as well,” Blumenthal says.

Other speakers at the event will include Jim Allwood of Informa Economics, Paul Bingham with IHS Global, RFA president Bob Dinneen and Dr. Erick Erickson with USGC.

More than 170 international buyers of U.S. DDGS and coarse grains are scheduled to attend the event, including representatives from China, Japan, Taiwan, Korea and Vietnam – countries which have a major interest in DDGS. The Export Exchange will be held Oct. 6-8, 2010, at the Hyatt Regency McCormick Place Hotel in Chicago. Registration is available on-line with a $100 discount for registrations received before September 4.

The Brazilian Sugarcane Industry Association UNICA this week drew attention to conflicting statements made in the past week by Growth Energy representatives about what they would like to see done with the tariff on foreign ethanol that is tied to the blenders tax credit under the Fueling Freedom plan introduced by the organization last week.

In a post on the blog SweeterAlternative and a YouTube video, UNICA noted apparent discrepancies between statements made by Growth Energy Co-Chairman Jeff Broin of POET and fellow co-chair Gen. Wesley Clark.

In an interview, Broin said that under an open market “a tariff becomes less important because we would have access to the entire market.” However, he adds that “if Brazil has a tariff, I think the U.S. should have a tariff that’s the same.” During a Senate Agriculture Committee hearing this week, Clark said they were “strongly in favor of keeping that tariff in place” adding that “There is absolutely no reason for the United States to trade dependence on foreign oil (for) dependence on foreign produced ethanol.”

Joel Velasco of UNICA writes, “What I find most interesting today is that the two chairmen of Growth Energy seem to have completely different positions on the tariff. Which is it? Does Growth Energy support market competition and consumer choice or not?”

Growth Energy sought to clarify the organization’s position on the tariff in relation to the “Fueling Freedom” plan in a blog post today, saying that the two co-chairmen were talking about different scenarios – with or without an “open market.” “Growth Energy’s position on the tariff has been consistent: it makes no sense to remove the tariff when all we will do is shut down domestic ethanol production,” the post concludes. “However, if lawmakers implement the Fueling Freedom plan and we transition to an open market, the tariff becomes less important.”

As Renewable Fuels Association (RFA) president Bob Dinneen was in Seville, Spain talking about American ethanol in the world market, the organization released a new report on rising U.S. ethanol exports.

“The Paradox of Rising U.S. Ethanol Exports: Increased Market Opportunities at the Expense of Enhanced National Energy Security?” highlights how the nation quickly evolving from a net importer of ethanol into a net exporter, sending our home-grown fuel to countries like Canada and the Netherlands, and even Brazil and OPEC nations in Middle East.

The question becomes, do we want to export our biofuels and the benefits they provide, or do we want to use them here at home to help secure our energy future? Or both?

RFA’s Matt Hartwig discusses the issue in this edition of “The Ethanol Report.”

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Renewable Fuels Association (RFA) president and CEO Bob Dinneen has been keeping his Twitter followers up to speed on the activities at the World Biofuels conference in Seville, Spain this week. Industry leaders from all over the world are meeting at the event, where Dinneen did a presentation on American ethanol in the world market.

Here are a few of Bob’s tweets from Spain:

Brazilian contingent did not attend World Biofuels Conf for first time ever. Speculation is that as their production falls, so does interest.

At World Biofuels Conf – lots of talk about increased US ethanol exports, including exports of ETBE to Europe. ETBE still used here.

At World Biofuels Conf in Seville, EPA’s Margo Oge says “oil spill in the gulf a reminder of the cost of our dependence on petroleum.”

At Biofuels Conf in Seville, EPA’s Oge notes “uncertainty” with ethanol lifecycle analyses and commits EPA to evaluating new science.

At World Biofuels Conf, panel on Lifecycle Analysis discusses need for consistent metrics and transparancy in LCA. Does EPA meet that goal?!

In his address, Dinneen noted the tremendous increase in efficiency for U.S. ethanol industry over the past decade and that increased ethanol output in Brazil has come primarily by increasing acreage, while increased production in the United States has come through higher corn yields.