1. Value Added Agriculture Program www.iavaap.org 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

2. Value Added Agriculture Program www.iavaap.org 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.

3. Value Added Agriculture Program www.iavaap.org 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

4. Value Added Agriculture Program www.iavaap.org Plants operating in 2006 Average production –60 mgy Range –20 mgy – 120 mgy Plants produce at 105-110% above rated capacity Most have outbound rail access Few have inbound rail access

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

6. Value Added Agriculture Program www.iavaap.org 2006 vs. 2007 Plants are larger Fractionation Higher corn prices compared with ethanol prices Distillers grains became larger percentage of income

7. Value Added Agriculture Program www.iavaap.org 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 241,6405915,021 Plants, expansions under construction 181,4105034,280 Wet Mills71,2104363,704 Nearby, Iowa Draw** 64021441,220 Subtotal554,6621,67414,225 Announced272,5239017,659 Total827,1852,57521,884 *Operating at rated capacity. **Plants in bordering counties of other states with 50% use assigned to Iowa corn.

8. Value Added Agriculture Program www.iavaap.org 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!)

9. Value Added Agriculture Program www.iavaap.org 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.

10. Value Added Agriculture Program www.iavaap.org 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)

11. Value Added Agriculture Program www.iavaap.org 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

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

13. Value Added Agriculture Program www.iavaap.org 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 600 - 33,000 bu/d –Better able to handle specialty beans –Meal and oil differ from solvent products

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

15. Value Added Agriculture Program www.iavaap.org Source: Google 2007

16. Value Added Agriculture Program www.iavaap.org Summary Statistics n Annual Capacity (MM bushels) Annual Oil Production (MM gallons) Biodiesel Max Annual Production (MM gallons) Crush plants13 436.5610.0488.0 Expeller plants11 17.0 17.413.9 Milling and Soyfoods 9 3.5 n/a Total457.0627.4501.9 Iowa Soybean Processing Capacity

17. Value Added Agriculture Program www.iavaap.org Iowa Biodiesel Production nmgy% 2007 SB oil Operation1431865.4% Construction 2 35 7.2% Subtotal1735372.6% Planned1448599.6% Total31838 172.2%

18. Value Added Agriculture Program www.iavaap.org What Could Corn Oil Add? Grain YieldOil Yield (bu/acre)(lb/acre) Soybeans 52.0567 Corn175.0350 2007 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; 13.95 mil ac corn

19. Value Added Agriculture Program www.iavaap.org What Could Corn Oil Add? Max. OilBiodiesel (MM lbs)(MM gal) Soybeans 4743.9486.6 Corn4882.6500.8 9626.5987.4 Operating + Construction35335.8% Planned48549.1% 83884.9% Assume 7.8 lb/gal oil and 80% biodiesel yield 8.36 mil ac soybeans; 13.95 mil ac corn

20. Value Added Agriculture Program www.iavaap.org What About the Acreage Split? Corn/SBMax Biodiesel (billion bu)(million gal) 20062.05/0.51980.7 20072.44/0.44987.3

21. Value Added Agriculture Program www.iavaap.org What About the Acreage Split? DDGSSBMProtein (mln ton)(mln ton)(mln ton) 200617.4311.259.9 200720.75 9.7710.1 Issues: Protein quality (amino acids) Energy content (starch, oil)

22. Value Added Agriculture Program www.iavaap.org Concerns for the biodiesel industry Adequate supply Speculators driving prices higher Markets for glycerin

23. Value Added Agriculture Program www.iavaap.org 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

24. Value Added Agriculture Program www.iavaap.org Acknowledgements Iowa Grain Quality Initiative www.iowagrain.org Special thanks to: Robert Mortensen, Value Added Agriculture Program Andy Larson, ISU Sustainable Agriculture Program

25. Value Added Agriculture Program www.iavaap.org Contact information Iowa State University Extension Value Added Agriculture Program www.iavaap.orgwww.iavaap.org or www.agmrc.orgwww.agmrc.org Connie Hardychardy@iastate.edu Ray Hansenhansenr@iastate.edu Iowa Grain Quality Initiative www.iowagrain.org Howard Shepherdhoward@iastate.edu Charles Hurburghtatry@iastate.edu