1. 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 chart@iastate.edu 515-294-9911

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

3. Department of Economics Ethanol Margins Source: ISU -- CARD

4. 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?

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

6. Department of Economics Relative Prices (Jan. 2007 = 1)

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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%

13. 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 ethanol @ $1.60/gallon = $4.48 17.75 lbs. of DDGS @ $92/ton= $0.82 Revenues per bushel= $5.30 Ethanol plant w/ fractionation: 2.72 gallons of ethanol @ $1.60/gallon = $4.35 13.5 lbs. of high protein DG @ $102/ton= $0.69 5 lbs. of germ @ $115/ton= $0.29 3 lbs. of bran @ $65/ton= $0.10 Revenues per bushel= $5.42

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

15. Department of Economics Ethanol Margins Source: ISU -- CARD

16. Department of Economics Thank you for your time! Any questions? Iowa Grain Quality Initiative: http://www.iowagrain.org/ My web site: http://www.econ.iastate.edu/faculty/hart/