Value Added Agriculture Program Impacts of Increased Local Processing: Update on Ethanol and Soybean Operations Iowa Grain Quality Initiative Iowa State University January 11, 2008 Surveys conducted by: ISU Extension Value Added Agriculture Program Sponsored by: ISU Extension Iowa Grain Quality Initiative

Value Added Agriculture Program Project objectives Maintain 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 and soy processing industries and on their input supply chains.

Value Added Agriculture Program Operating plants 137 Plants in USA in 26 states 7.59 BGY 27 Plants in Iowa 2 BGY Construction/expansion 68 Plants in USA 6.5 BGY 18 Plants in Iowa 2 BGY Planned Approximately 15 BGY USA 2.5 BGY in Iowa

Value Added Agriculture Program Plants operating in 2006 Average production –60 mgy Range –20 mgy – 120 mgy Plants produce at % above rated capacity Most have outbound rail access Few have inbound rail access

Value Added Agriculture Program Plants currently under construction Average production –85 mgy –Range 35 – 200 mgy –Expansions may double original plant size

Value Added Agriculture Program vs Plants are larger Fractionation Higher corn prices compared with ethanol prices Distillers grains became larger percentage of income

Value Added Agriculture Program Iowa Ethanol Production and Corn Usage Summary Statistics n Ethanol Produced mil gal/yr Corn Used mil bu/yr DGS 000 tons/yr Current Dry-grind Plants 241, ,021 Plants, expansions under construction 181, ,280 Wet Mills71, ,704 Nearby, Iowa Draw** ,220 Subtotal554,6621,67414,225 Announced272, ,659 Total827,1852,57521,884 *Operating at rated capacity. **Plants in bordering counties of other states with 50% use assigned to Iowa corn.

Value Added Agriculture Program Distillers Grains production In 2007, the USA is expected to produce 16 million tons of DDGS 90% is sold in US as livestock feed Export customers include: –Mexico –Taiwan –Japan –China –Morocco –Costa Rica –EU (approved GM crops in 2006 production; not ’07) Feeds Use 75% Cattle 20% Swine 5% Poultry and other (Meat goats, too!)

Value Added Agriculture Program DDGS Current issues Need a better way to get the product to the customer – Flowability still an issue Marketing groups being formed for larger buyers –Product not standardized, but… »A biological process lends itself to variability. »No other feed ingredient has mandated standard.

Value Added Agriculture Program DDGS Quality issues Color is the big tip-off with export customers. Variability in nutrient content Mycotoxins Digestibility (particularly protein and amino acid digestibility due to Maillard reaction)

Value Added Agriculture Program Soybean Processing Survey Survey asked for: –Processing capacity –Preferred soybean quality –Types of products –Amount of storage Contacted 31 soybean processing plants and 14 biodiesel refineries; 11 responded

Value Added Agriculture Program Soybean Processing Solvent crush plants Expeller plants Mills/Flaking plants Soyfood –Some plants more capable of handling Indentity Preserved and Organic Soybeans

Value Added Agriculture Program Crush and Expeller plants Crush (solvent) plants (13) –Capacity 27,000 – 100,000+ bu/d –Oil refining capabilities, meal, hulls –Capacity for 98.5% of Iowa’s 2007 crop Expeller plants (11) –Range ,000 bu/d –Better able to handle specialty beans –Meal and oil differ from solvent products

Value Added Agriculture Program Milling, Soyfoods Whole beans, usually Identity Preserved Finished foods and ingredients May purchase soybeans from sorting/cleaning operations

Value Added Agriculture Program Source: Google 2007

Value Added Agriculture Program Summary Statistics n Annual Capacity (MM bushels) Annual Oil Production (MM gallons) Biodiesel Max Annual Production (MM gallons) Crush plants Expeller plants Milling and Soyfoods n/a Total Iowa Soybean Processing Capacity

Value Added Agriculture Program Iowa Biodiesel Production nmgy% 2007 SB oil Operation % Construction % Subtotal % Planned % Total %

Value Added Agriculture Program What Could Corn Oil Add? Grain YieldOil Yield (bu/acre)(lb/acre) Soybeans Corn Avg. Yields 10.9 lb oil/bu soybeans 2.0 lb oil/bu corn Assume 7.8 lb/gal oil and 80% biodiesel yield 8.36 mil ac soybeans; mil ac corn

Value Added Agriculture Program What Could Corn Oil Add? Max. OilBiodiesel (MM lbs)(MM gal) Soybeans Corn Operating + Construction % Planned % % Assume 7.8 lb/gal oil and 80% biodiesel yield 8.36 mil ac soybeans; mil ac corn

Value Added Agriculture Program What About the Acreage Split? Corn/SBMax Biodiesel (billion bu)(million gal) / /

Value Added Agriculture Program What About the Acreage Split? DDGSSBMProtein (mln ton)(mln ton)(mln ton) Issues: Protein quality (amino acids) Energy content (starch, oil)

Value Added Agriculture Program Concerns for the biodiesel industry Adequate supply Speculators driving prices higher Markets for glycerin

Value Added Agriculture Program Concerns for the organic/IP processors Challenge to increase acres (or maintain) Erosion of non-GMO germplasm Training needs for new growers Imports from China will take over markets –Group certification of farmers in China

Value Added Agriculture Program Acknowledgements Iowa Grain Quality Initiative Special thanks to: Robert Mortensen, Value Added Agriculture Program Andy Larson, ISU Sustainable Agriculture Program

Value Added Agriculture Program Contact information Iowa State University Extension Value Added Agriculture Program or Connie Ray Iowa Grain Quality Initiative Howard Charles