Department of Economics Examining the Product Streams & Costs of Corn Fractionation Systems 2009 AACC International Annual Meeting Baltimore, Maryland September 14, 2009 Chad Hart Assistant Professor/Grain Markets Specialist

Department of Economics Ethanol Production Based on the pace over the 1 st 5 months of 2009 Sources: Renewable Fuels Association, Energy Information Administration

Department of Economics Ethanol Margins Source: ISU -- CARD

Department of Economics Corn Composition Source: 2009 FEW Conference presentation by Reg Ankrom (CPT) Looking for: Improved efficiency Reduced energy usage Reduced water usage Diversified product stream Why Fractionate?

Department of Economics Source: Dave Elsenbast, REG Information from Reg Ankrom’s ppt at the FEW conference

Department of Economics Relative Prices (Jan = 1)

Department of Economics Fractionation Technologies  MOR Technologies  Corn Value Products  Langhauser Associates  FC Stone Carbon LLC and Maize Processing Innovations  Buhler Inc.  Cereal Process Technologies  FWS Technologies  American Milling Group  ICM Inc.  POET  Renessen LLC  Delta-T Corporation

Department of Economics MOR Technologies  Combines wet and dry milling techniques  Outputs:  Ethanol  High protein distillers grains  High oil germ (food use, 42% oil content)  Bran (60% for food and 40% for feed)  Offers oil extraction technology as well  Claims a 2% starch loss from process

Department of Economics Langhauser Associates  A wet fractionation approach  Outputs:  Ethanol  High protein distillers grains  High oil germ (food use, 48-50% oil content)  Bran (80% for food and 20% for feed)  Includes oil extraction technology  Operating costs roughly 10% higher than traditional plant

Department of Economics FC Stone Carbon & Maize Processing  A wet fractionation approach  Outputs:  Ethanol  High protein distillers grains (47% protein)  High oil germ (food use, 42% oil content)  Bran  Includes oil extraction technology

Department of Economics ICM  A dry fractionation technology  Outputs:  Ethanol  High protein distillers grains  High oil germ (food use, 26% oil content)  Bran  Snack grits  Corn meal  Can include oil and protein extraction technologies

Department of Economics Capital Costs  Range from $10 million to $40 million for a 50 million gallon ethanol plant  The inclusion of corn oil extraction technologies moves costs to the higher end of the spectrum  Most vendors point to a payback period of under 3 years Variable Costs  Decreased energy needs per gallon for:  Liquidification and cooking  Distillation  Drying of distillers grains and solubles  Possible energy generation from bran  Could reduce energy demand by nearly 50%

Department of Economics Product Streams Corn costs: $3.14 per bushel, Illinois ethanol plant report (USDA-AMS, as of early Sept. 2009) Traditional ethanol plant: 2.8 gallons of $1.60/gallon = $ lbs. of $92/ton= $0.82 Revenues per bushel= $5.30 Ethanol plant w/ fractionation: 2.72 gallons of $1.60/gallon = $ lbs. of high protein $102/ton= $ lbs. of $115/ton= $ lbs. of $65/ton= $0.10 Revenues per bushel= $5.42

Department of Economics Tapping into Many Markets Source: 2009 FEW Conference presentation by Neal Jakel (Delta-T)

Department of Economics Ethanol Margins Source: ISU -- CARD

Department of Economics Thank you for your time! Any questions? Iowa Grain Quality Initiative: My web site: