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Distillers Grains Production & Markets Winter 2012
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Plus New uses for DDGs
in Plastic ResinsPage 12
www.ethanolproducer.com/distillers-grains-production-markets
INSIDE: WHAT IS THE TRUE VALUE OF DDGS?
Distillers Grains licks With supplements Extend Forage supply Page 14
lime-Treated stover Added to Distillers Grains Boosts Feed Value Page 8
Beefing Up DDGS
WINTER 2012
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features
CoNTENTscontents
DePartMents
4 Talking Trade Building a World Market from Scratch By ALVARO CORDERO
5 DDG Commentary Distillers Grains Benefits, Supply Dilemma By CHARLIE STAFF
6 Feed for Thought The Disconnect Between DDGS Price and Value By JERRy SHURSOn
7 News Briefs People, Partnerships & Deals
16 DrYers New Algorithm Aids DDGS MoistureControl, Profitability Case study demonstrates dryer improvement By BRIAn DURHAM AnD ROGER DOUGLAS
20 VaLue Balancing DDGS Value for Producers, FeedersExamining the value of ethanol’s main coproduct By KURT A. ROSEnTRATER
neW usesPlastics Cozy Up to Distillers GrainsBio-based resin with DDGS is well-receivedBy HOLLy JESSEn
BeefMixing it Up Distillers grains combined with stover tested for feedBy KRIS BEVILL
suPPLeMentsRolling into the Forage MarketDrought gives SweetPro a chance to show its benefitsBy HOLLy JESSEn
8 1412
WInTER ISSUE 2012 VOL. 02 ISSUE 01
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rom a barely recognized feed alternative 10 years ago, distill-ers dried grains with solubles continues to gain recognition and markets. DDGS is now
widely recognized internationally, where its use continues to evolve.
Forty-four countries imported DDGS in the first nine months of 2010, and in 33 of those markets last year, purchases increased over 2010 levels. Excluding China, world sales volume also increased. In the European Union, growth was spectacular: Portugal and the Netherlands went from zero purchases in the first nine months of 2010 to 23,595 met-ric tons and 32,222 tons, respectively. France, which imported just 7,346 tons in all of 2010, bought 59,896 tons. British imports grew al-most 60 percent, from 67,283 tons to 106,957 tons, and Spanish purchases exploded from 16,495 tons to 111,538 tons. Buying increased in a host of other countries. In Asia, Japan’s imports grew by 41 percent and Taiwans’ and the Philippines’ by 51 percent. Honduras bought 65 percent more DDGS, and sales to Morocco and Malaysia were 78 percent higher.
“DDGS is now a commodity in demand around the world,” says Wendell Shauman, chairman of the U.S. Grains Council, which has spearheaded international programs to promote DDGS. In 2011, the Council’s DDGS programs scored multiple successes, helping to offset one major setback: China’s decision to initiate an antidumping case against U.S. DDGS sales. Filed in December 2010, the case created uncertainty for Chinese importers and is dampening DDGS demand until the Chinese government resolves the case. A decision was due at the end of 2011,
although China could extend the case for an additional six months.
Despite the uncertainty, Chinese imports totaled more than 5.9 million tons by the end of September, down 49 percent from the previous year, but still almost double China’s 2009 purchases. “We continue to see great market potential for distillers grains in China and expect to maintain council efforts to expand its use,” said Shauman, noting that the council has continued educational work in China, such as its highly successful workshops in Guangzhou and Qingdao. “We had 200 to 250 people at each session, a much larger at-tendance than we expected,” he reported.
In another successful effort, the council matched buyers’ workshops with nutri-tion short courses for customers in Central America, South America, North Africa and the Middle East. “These buyers are cur-rently importing feed grains, but while they are aware of coproducts like DDGS, many haven’t yet committed the resources to develop internal markets for them,” explained Chris Corry, USGC senior director of inter-national operations. Meanwhile, nutritionists from the same companies completed short courses at Kansas State’s International Grains Program. “Now, when the buyers confer with their nutritionists, they will have good data on how coproducts like DDGS can fit into their feed formulations,” he explained.
Participation by U.S. DDGS suppliers is a key component of such conferences. “These buyer conferences included a half-day for personal meetings between buyers and sellers,” Corry said. “The buyers could sched-ule 30-minute meetings with individual sup-pliers, and we know deals were being made.”
In addition to workshops, the council’s
one-on-one technical consultations with key end-users continue to be a highly effective way to educate customers and convince them to use DDGS. In some regions, resolving regulatory issues is another essential step toward DDGS sales. For example, in a major success culminating years of council work, Saudi Arabia added both DDGS and corn gluten feed to its import feed ingredient list. The action establishes a subsidy intended to keep feed input costs low for Saudi feed producers and end users and creates a strong incentive for sales. “Ingredients not on the list have historically attracted little attention,” said Joe O’Brien, USGC regional director in the Middle East. “Saudi Arabia is a lucrative feed importing market that could quickly build its DDGS purchases to a half-million tons and could reach a million tons in time.”
As the DDGS economy evolves, the council is further adapting its DDGS pro-grams to meet new challenges, including the ethanol industry’s move into oil extraction. “As the supply of lower-oil DDGS increases, we need to educate foreign buyers about its different characteristics,” said Shauman. “The lower oil content means a difference in how it will perform in livestock rations. “As this newer form of DDGS moves into the mar-ketplace, we want to make sure our customers aren’t surprised. We need to educate them about what to look for and how to recalibrate feed formulas.”
Author: Alvaro Cordero Manager of International Operations for DDGS
U.S. Grains Council(202) 789-0789
taLkIng traDe usgs
Building a World Market from ScratchBy ALVARO CORDERO
F
WINTER 2012 | 5
ooking back on 2011, it has been most rewarding for those producing and using distill-ers grains. The price of corn increased to nearly $8 a bushel
and the price of distillers grains to over $200 a ton in many cases. This has been welcomed by ethanol distillers to help offset higher corn prices and, most importantly, to animal feeders to replace corn with a nutri-tious feed ingredient at less cost. DDGS replacement value is not just on a pound for pound basis. As USDA economists Linwood Hoffman and Allen Baker revealed in their well researched USDA report, “Estimat-ing the Substitution of Distillers Grains for Corn and Soybean Meal In The U. S. Feed Complex,” on a average basis, this equates domestically to an estimated 1.22 pounds corn and soybean meal being replaced by one pound of distillers grains.
With 30 million-plus tons of distill ers grains being fed domestically, animal feeders saved more than $700 million this past year, based on Iowa State University economist Robert Wisner’s Nov. 22 distillers grains balance sheet, (www.extension.iastate.edu/AGdm/crops/outlook/dgsbalancesheet.pdf). When these values are multiplied by the difference in average current price value of DDGS vs. corn at $12 per ton and soy-
bean meal at $93 per ton, as reported in the Dec. 16 DTN Weekly Distillers Update, this provides an average estimate of the value to animal feeders. This value could be under-stated, based on some feedlots in Nebraska using little or no corn or soybean meal and recent university feeding studies at Ohio State and Illinois State successfully using 70 percent distillers grains in cattle rations.
There also are reports this year of large hog confinement feeders using 40 percent and higher distillers grain in rations, ( page 30, November, Pork Magazine). Could this have contributed to this industry seeing in 2011 its highest profits since 2006? (As reported by Chris Hurt in the Nov. 22 Pork Network.) The other major feed segment, the poultry industry, has been slow to take advantage of distillers grains but is now moving forward with improved rail into the Southeast, material handling capabilities and recent enzyme developments that will allow higher distillers grains ration levels.
Looking ahead, USDA is projecting continued high corn prices this year which means there will be continued strong de-mand for distillers grains. Clearly, corn and distillers grains pricing in past years shows the strong price relationship between the two. This is far from a mature market with very informed end users, however. There are many opportunities for expanding usage and more marketing efforts are needed.
There unquestionably is going to be continued demand for distillers grains, if corn and other grains prices stay higher in 2012 and as world demand for grain increases. There are very valid estimates that the domestic feed market potential for distillers grains is double that of current
usage, but a question arises. What are the prospects for more ethanol from grain pro-duction with loss of tax advantages, effective lobbying against ethanol by animal feeding and petroleum organizations, and resistance from other sectors? Prospects to expand do-mestic ethanol-from-grain production look grim. It would appear we have reached the ethanol blend wall. Cellulosic ethanol will likely be a growth area, but cellulosic sources do not produce a coproduct that meets the legal definition for distillers grains: coming from a grain-based feedstock with a process involving yeast fermentation and distillation.It’s clear we are entering a new era of distill-ers grains supply without the previous 20 to 30 percent growth every year. How will this effect availability and price when considering other possible market and political changes that seem to be unpredictable? Times will be changing again and we all must remain vigilant and flexible.
Author: Charlie StaffExecutive Director, Distillers Grains Technology Council
(502) [email protected]
L
DDg coMMenrarY
Distillers Grains Benefits, Supply Dilemma By CHARLIE STAFF
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feeD for tHougHt
or most people, price and value mean the same thing. But from a nutritionist or livestock and poultry producer point of view, they
are very different. In fact, this disconnect between price and value of distillers dried grains with solubles is one of the primary reasons why DDGS has become the most popular alternative ingredient in animal feeds at a time of record high corn and soybean meal prices.
When it comes to marketing DDGS, our current system treats DDGS like all other commodities. When negotiating price and contracts, marketers usually provide guarantees for minimum protein/fat and maximum moisture and fiber. These trading specifications mean very little, however, when it comes to determining the actual value DDGS provides in animal feeds. Nutritionists determine value not only on purchase price, but also on the concentration of energy as well as digestible amino acids (protein) and phosphorus, dietary inclusion rate and the displacement of more expensive ingredients. The DDGS disconnect is that value is based on energy and digestible nutrient content, and not pro/fat.
Since DDGS is used primarily as an energy source in animal feeds, it follows the market price of corn—the primary grain energy source in animal feeds— more closely than soybean meal price, even though DDGS is moderately high in protein. Numerous research studies have shown that the energy value of wet distillers grains provides 120 to 150 percent of the energy value of corn for
beef feedlot cattle, approximately the same energy value as corn for swine, and about 85 percent of the energy value of corn for poultry. When we also take into account that protein (amino acids) and phosphorus (the other two most expensive components of animal feeds) are three times more concentrated in DDGS compared to corn, it is surprising that DDGS has been priced at 75 to 85 percent of the value of corn for much of the past couple of years. Livestock and poultry producers are getting an excellent value for the price they pay for DDGS.
But this is not the end of the story. Variation in energy and digestible nutrient content among DDGS sources also creates additional value opportunities for those who feed DDGS. Depending on prices of competing ingredients, such as corn, soybean meal and inorganic phosphate supplements, there can be as much as a $60 per ton difference in feeding value between a high-value DDGS source vs. a lower-value DDGS source, even though both sources are priced the same. This means that nutritionists have the opportunity to capture this extra value by knowing the source and accurately estimating the energy value and digestible nutrient content. Since no DDGS value standards exist, marketers are unable to capture part of this value difference under the current pricing mechanisms used.
Value of distillers coproducts is also determined by the animal species because of the different abilities of their digestive systems to utilize nutrients. For example, typical DDGS containing 10 percent crude fat will always be a higher value in ruminant diets than in swine and poultry because of ruminants’ ability to extract
more energy from the fiber fraction and their ability to use the nitrogen in the protein to make customized microbial protein to meet the animal’s needs. Pigs and poultry must rely on the digestible portion of lysine and other essential amino acids. Extracting a portion of the oil from DDGS makes good economic sense for ethanol plants, but it changes the value of DDGS for different species. Our preliminary research results indicate that the impact of oil removal on energy value for swine is about half of the reduction in energy value for poultry. This creates even greater value differences among animal species than we’ve experienced in the past.
As ethanol plants evaluate the economics and ethanol production efficiency advantages of separating other components such as fiber or phosphorus, some of those components may have minimal value and use in some segments of the food animal industry. We will likely see market differentiation where only some segments of the food animal industry will use the new coproducts, while other segments will either not use them or only minimally, depending on price. Therefore, as coproducts continue to evolve in the ethanol industry, it will be increasingly difficult for marketers to use traditional pro/fat guarantees and pricing mechanisms because of the growing disconnect between price vs. value. One last thought to chew on: Will the net value of the parts be greater than the whole?
Author: Dr. Jerry Shurson Professor, Department of Animal Science
University of Minnesota(612) 624-2764
The Disconnect Between DDGS Price and Value By DR. JERRy SHURSOn
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WINTER 2012 | 7
neWs briefsPeople, Partnerships & Deals
new coproduct shows promise for poultry feedAn algae strain grown by BioProcess Algae LLC at Green Plains Renewable Energy Inc.’s 65 MMgy ethanol plant in Shenandoah, Iowa, is one step closer to entering the poultry feed market. First-round feed trials were conducted last year in conjunction with the University of Illinois, led by poultry science expert Carl Parson. The trials showed that the algae not only tested well com-pared to soy meal, but also proved to have higher energy content than corn, distillers grains and 70 other common feed products, said BioProcess Algae CEO Tim Burns.
The algae strain was also shown to be comparable to soy meal in amino acid profiles and could be a cost-effective source of Omega-3 fatty acids in poultry diets. Now that feed trials have proven successful, Burns said the next step is to evaluate the regulatory steps necessary to bring the prod-uct to the market.
BioProcess Algae is a collaborative venture between GPRE, filtration product manufacturer Clar-cor Inc., wastewater purification technology company BioProcess H20 LLC and investment group NTR plc. The bioreactors produce algae using CO
2 from the ethanol plant along with waste water,
waste heat, sunlight and nutrients. The initial commercial-scale unit is now under expansion.
North Prairie, Wis.-based, dynatek/manierre has changed its name to Dynatek Articulated Loading Systems and adopted a new stylized logo to better define its business specialty and to call attention to its growth. Dynatek, a division of D&D Products, manufactures articulated truck, railcar and barge loading systems that are currently being used to load trucks and railcars with DDGS by more than 100 ethanol plants in the U.S. and Europe.
Lechler Inc. announced several product releases. Its expanded line of Vaneless Tangential full cone nozzles are more resistant to clogging. A new polypropylene WhisperBlast air nozzle looks and performs much like the well-known, top selling, flat Whis-perBlast nozzle, but is made from material that meets U.S. Food and Drug Administration standards. The company has also rede-signed and improved its Spinner series of tank cleaning nozzles providing more powerful jet sprays.
The Distillers Grains Technology Council will hold its 16th annual Distillers Grains Symposium, May 16-17 at the Hyatt Regency at the Arch Hotel in St. Louis, Mo. Focusing on DDGS, 14 speakers will give the latest information from animal feeding trials in beef, dairy, pigs and poultry, the latest on the effect of corn oil removal on nutrition as well as discussions on logistics, innovation and government regulation. For more information visit www.distillersgrains.org.
Poet offers antibiotic-free DDGSIn August, Poet LLC announced it is now offering certified anti-biotic-free DDGS as part of its line of trademarked Dakota Gold DDGS. “Since it was introduced more than 15 years ago, Dakota Gold has built a reputation for consistency and quality,” said Mark Giesemann, director of technical services at Poet Nutrition. “We had to ensure that any adjustments in our process didn’t compro-mise that reputation. After a few years of testing and development, we’ve found that the DDGS from the antibiotic-free process are of the highest quality.”
Poet tested its new process with egg-farming customers with sup-port from the United Egg Producers. “Poet partnered with UEP in a recently completed study showing that adding DDGS to layer diets can dramatically reduce ammonia emissions from the farm,” said Chad Gregory, senior vice president at UEP. “Their antibiotic-free process is another example that demonstrates Poet’s commit-ment to animal agriculture.”
The process has been installed at all of Poet’s plants to help the company meet demand where it arises, Nathan Schock, director of public affairs and corporate social responsibility told EPM. Only those customers that specifically request certification will receive a certified antibiotic-free product.
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Combining stover with distillers grains for cattle feedBy KRIS BEVILL
Beef
Corn stover has been used in small amounts as cattle feed for more than 100 years. Separately, distillers grains has grown in popularity as a cattle feed over the past few decades as ethanol plants have established themselves throughout the Midwest, often in close proximity to feedlots. But now, research is showing that by combining the two feeds, the mixture can be fed in greater percentages as a nutritious, highly palatable and eco-nomical alternative to corn.
Archer Daniels Midland Co. has spearheaded much of the research exploring the use of treated stover and distillers grains as a replacement for corn. Its work in that area began more than a decade ago, as company scientists began to rec-ognize the opportunity for getting more value out of the by-products produced at corn processing plants. The company expanded its work in this area to include crop residues and some energy crops about five years ago, as corn prices con-tinued to climb and demand for economical feed products also increased. A year ago, the company announced early re-sults of the research, which showed that by treating stover with hydrated lime (calcium hydroxide), it could comprise up to 25 percent of cattle rations when combined with wet dis-tillers grains with solubles (WDGS). Traditionally, untreated stover has been fed only in small amounts (approximately 5 percent of the feed ration) and only as a fiber source, rather than an energy source, so the finding that rations could be in-creased and used in feedlots was considered quite significant by those involved in the project.
“Global agriculture needs to produce more using less water, fertilizer and other inputs, and without bringing vast amounts of new land into production,” Mike Baroni, vice president of economic policy for ADM, said following the company’s February announcement. “Using crop residues and coproducts, rather than higher-value grains, to help feed animals could enable the world to make more of the global harvest and help agriculture expand to meet all needs.”
Mike Cecava, ADM’s director of feed technology, says ADM expects there to be continued pressure on grain prices, so finding an economical alternative to corn as livestock feed is an incentive to explore stover and other coproducts. He stresses that much of the research conducted in recent years on crop residues has its roots in the 1960s and 1970s, with one important difference. “Now we’ve got the opportunity to use more of these ag coproducts like the distillers grains, some of the liquid feed ingredients, and corn gluten feed, to complement the residues,” he says. “The crux of the mat-ter today is we can use combinations of these coproducts and residues to substitute out corn and soybean meal to give producers more flexible combinations. We’ve been able to show that we can substitute out a fair amount of grain, we can reduce ration costs and we can improve the cost of gain. It looks commercially feasible and I think it’s very sustain-able.”
treating ItOne of the researchers involved in the ADM-funded
itMixing
WINTER 2012 | 9
Beef
Up
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Beef
testing of treated corn stover was Jim Rus-sell, professor of animal science at Iowa State University. He says another reason for the latest round of research on using stover as feed sprouted from a desire by cattle producers to identify a low-protein, low-phosphorous energy source that could be added to feedlot diets as a replacement for high-priced corn. Russell and other ISU researchers applied various treatments to stover to increase its digestibility and found that while ammonia—which was the most popular stover treatment method a few decades ago—is effective, it also increases protein content. Because distillers grains already has a high protein levels, as well as sulfur and oil, additional protein from the stover is undesirable. Calcium hydroxide, however, was found to be effective in break-ing down the stover to improve digestibility without adding unnecessary protein.
Cattle fed a diet consisting of 20 per-cent calcium hydroxide-treated stover, 40 percent WDGS and 40 percent corn gained as much weight as cattle fed a control diet containing just 5 percent stover. In fact, the only notable difference between diets containing greater percentages of treated stover and the control diet was that cattle fed higher levels of forage had slightly less marbling, Russell says. Cecava adds that while the ISU test showed reduced mar-
bling, other research has shown no differ-ence in marbling between beef fed mostly corn and beef fed greater percentages of stover and distillers grains. He expects marbling and other effects of livestock di-ets will vary depending on region, just as livestock diets vary by region. And while reduced marbling usually means a reduced price for beef on the market, when corn prices are high, it could prove to be more profitable to reduce the feed costs rather than suffer the burden of high inputs for prime quality beef.
good economicsISU conducted an economic analysis to
evaluate the cost of production and found that a treated stover with modified distillers grains ration is cost comparative with corn as low as $4 per bushel, assuming that the distillers grains is priced at 65 percent of the corn price and bagged, treated stover is $51 per ton. As corn prices were increased to $5 and $6 per bushel, the economic ben-efits of using any type of stover becomes more attractive, but the analysis found that calcium hydroxide treated stover offered the best returns.
the right combinationResearchers will continue to evaluate
the best methods of application for the
calcium hydroxide, but Russell says re-search has shown the treatment works best if the stover has a high moisture content because the lime will be added as a dry material. When the ISU project was being conducted in October 2009, half of the approximately 76.5 tons of harvested corn stover was left on a concrete surface after harvest until it could be packed into a silo bag. Before it was packed, the area received nearly 2.5 inches of rain, which increased the moisture content of the stover to about 40 percent. Russell says some feeders may need to add water to the stover when they treat it with calcium hydroxide; others are exploring adding the calcium hydroxide as a slurry.
Another topic of consideration is whether to include wet, dry or modified distillers grains. University of Nebraska-Lincoln researchers have concluded that while any type of distillers grains will work, WDGS is by far the best performer. “Nu-tritionally, there is no difference,” says Ter-ry Klopfenstein, professor of ruminant nu-trition at UNL. “The moisture that’s there is what really enhances the palatability of those residues. The wet distillers is very palatable, so it makes unpalatable things like corn stalks readily consumed by the cattle.”
UNL researchers examined two differ-
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Beef
ent scenarios for feeding stover to cattle. The first scenario is one in which the cattle are let out to graze in the stover fields. This allows them to select the most appealing portions of the stover, primarily the leaves and husks. The result is that about half of the stover is left untouched by the cattle and can then be disked into the field by the farmer and serve as soil nutrients. Distillers grains is not directly mixed into the diet in this scenario, but can be fed as a supple-ment.
In the second scenario, stover is har-vested and ground into smaller particles, which is meant to encourage the cattle to consume the less-palatable stalks of the plant. “Still, the cattle are not very en-thused about that,” Klopfenstein says. “But if you mix the wet distillers grains with it, they’ll eat it. I can’t emphasize enough that there is tremendous complementarity be-tween these byproducts, especially the wet byproducts and the crop residues, whether it’s treated or not. That’s the key. One could do treatments to the residue and not feed the byproducts, but boy they really work well together.”
closed LoopFor corn farmers who supply ethanol
plants and raise cattle, this research pres-ents a closed-loop opportunity to serve
all their needs. Farmers can deliver their corn to the ethanol plant, pick up distillers grains at the back end and mix them with stover from their fields to feed their cattle. The stover-WDGS feed combination is also very attractive to feedlots, particularly those located near ethanol facilities, that have felt the pinch of rising grain prices.
In Nebraska, where cattle, corn and ethanol industries are all very strong, the concept is especially appealing. Klopfen-stein says he’s noticed tremendous interest from feedlots in the state and while every group has a percentage that will be resis-tant to change, the overall feedback has been very positive. “Nothing in my 46-year career has had as much impact on the cattle industry as ethanol has,” Klopfenstein says. “I’m not saying that’s bad. It’s just differ-ent. One has to be flexible and these by-products are really interesting.”
Cecava says he’s seen skeptics of the alternative feed quickly become believers once they see it in action. “We have been very pleased with the response so far,” he says.
Russell agrees. “We’ve known how to harvest corn stalks for a long time and have harvested them as cow feed in many cases, but as low-quality, low-value product,” he says. “This is a way to enhance the value.”
future competitor One thing many cattle producers may
eventually face is the irony that the sto-ver they’re using to replace the corn that is used for ethanol production could very well also become a desirable ethanol feed-stock in the future. In fact, much of ADM’s stover research in the past couple of years was conducted as part of a group effort known as the DAM project [John Deere, ADM, Monsanto] that focused on explor-ing stover as a power or biofuel feedstock. But until commercial-scale cellulosic etha-nol facilities come online, harvesting sto-ver for animal feed could provide farmers with a second crop from their corn acres and cattle producers with an economical, nutritious feed alternative. “Fuels are the holy grail,” Cecava says. “But animal feed could also be a very suitable application. The process technologies to use stover as a feed are not nearly as expensive [as etha-nol] and it hooks farmers up with a way to get the stover harvest going commercially. We’re interested in this so that people see that biomass can be a new feedstock.”
Author: Kris BevillAssociate Editor, Ethanol Producer Magazine
(701) [email protected]
12 |
Pilot testing gives new product the green lightBy HOLLy JESSEn
neW uses
Plastics Cozy Up to Distillers Grains
Plastic DDGs Heather Bearnes checks the quality of dried BioRes. She and Clark Maxon, right, are technicians working at a pilot plant producing a distillers grains-based replacement for petroleum-based products used for plastics production.
PHOTO: LAUREL BIOCOMPOSITE
WINTER 2012 | 13
neW uses
It’s a concept that has positives for both the ethanol industry and the plastics indus-try. Can a Nebraska company process wet distillers grains into a biobased resin to replace conventional petroleum-based resins? Laurel BioComposite LLC says yes.
The company is proving the concept at a pilot plant in rural Coleridge while moving ahead with plans to break ground this year on a full-scale production facility just a few miles away in Laurel,
Neb. The pilot plant, currently inhabiting a 500-square-foot area in a machine shed of a farm-er-investor, produces about 250 pounds of the biomaterial an hour and could easily be scaled up to 1,000 pounds an hour, says Lou Luedtke, startup manager.
The pilot plant started up the end of November and the trademarked BioRes pro-duced is being shipped to customers for testing. Preliminary results have shown that the product
is odorless and can be used at levels of 20 to 40 percent in injec-tion-molded plastics, providing a direct replacement for petroleum-based products. “It’s very feasible,” Luedtke tells EPM. “It is going into the product very nicely, it flows well and the injection molders are very pleased with it.”
BioRes has applications for use in the plastics, polypropylene and polyethylene industries, which use billions of pounds of petro-leum-based resins. The shipping, lawn and garden, agriculture and automotive industries are especially well-suited to take advantage of it. The concept has been generating a lot of interest, he says, with inquiries about the produce from all over the U.S. as well as places such as Italy and Germany.
The first production run at the pilot plant produced BioRes pellets for a major customer that will test it for enhanced adhesive applications for home products. Customer test results are being compiled in a database, which shows a 10 percent increase in stiff-ness and tensile modulus compared to plastics containing conven-tional fillers such as calcium carbonate and talc. Also, utilizing pat-ent pending BioRes results in plastic products with a lower specific gravity. The kicker, however, is that the product is priced the same as or slightly lower than traditional petroleum-based resins. “They’ll
actually save money with our material and be able to offer a bio content without charging a premium for it,” he says.
During the next phase of the project, the full-scale Laurel Bio-Composite plant will have the capability of producing 48 million pounds of BioRes yearly. It will run 24/7 with four shifts and will likely employ 20 people, including management. “Creating jobs there is going to be a major benefit,” he says. “Not everybody can stay on a farm and this gives them the opportunity to go to college and come back and work in the community.”
The benefits for the ethanol industry are big. The facility will provide an additional market for distillers grains from the three ethanol plants located within a 45-mile radius that produce a total of 345 million pounds of distillers grains. Future plans for the pilot plant include the possibility of putting it on skids and transporting it to cooperating ethanol plants to produce BioRes onsite.
The BioRes process involves adding propriety chemicals to a mixture of wet distillers grains and water, Luedtke says. After dry-ing, the material is milled and pelletized. While the pilot plant sends its material to another facility for pelletizing, the full-scale plant will pelletize the product onsite. The company does have customers that are studying BioRes in a powder form, however most potential customers are accustomed to using resin pellets. The product does not contain toxic compounds and is composed of 60 to 80 percent biomaterial.
The project is made possible through a combination of equity and debt financing. Major investors include Kearney Area Ag Pro-ducers Alliance members acting through the newly created KAAPA Investments LLC. If all went as planned, financing was to wrap up at the end of the year, Luedtke said in early December. “That would allow us to start construction of the plant in the spring and be ready to operate it by this time next year.”
Total cost has been estimated at $16.8 million. That’s actually a nearly $2 million decrease from the project’s initial cost estimates. “The pilot plant has given us some significant information so we can take out some of the redundancy that we thought we needed,” Luedtke explains.
The estimated cost of the project isn’t the only thing that has changed since the investigation stage. In July, the company termi-nated its licensing agreement with LignoTech, a New Zealand-based company that has a patent for a similar process. “We dis-covered that the material that the LignoTech process created was a dark color and had an odor to it and it was objectionable,” Luedtke tells EPM. “We’re continuing in a working agreement with them for the potential of other uses of their process, but relative to the distillers grains market, we’ve found an alternative process that we developed ourselves.”
Author: Holly JessenAssociate Editor, Ethanol Producer Magazine
(701) 738-4946 [email protected]
Cattlemen are increasingly turning to value-added distillers grains products from SweetPro FeedsBy HOLLy JESSEn
Rolling into the Forage Market
Bob Thornberg, president of sweetPro Feeds, isn’t exactly surprised by the com-pany’s 45 percent increase in business from 2010 to 2011. He’s surprised it took more than two decades to really catch on. “We had expected it to happen at a rate 10 years faster than this, but now what we’re seeing is a bigger total pro-spective market than we would have thought,” he says. “We would have expected to top out but now we are seeing no limits.”
SweetPro Feeds has two production facilities, in Walhalla, N.D., and Horton, Kan., and, if the current demand holds up, has plans to expand. The company produces feed supplements for livestock including calves, cattle, sheep and horses. All its products contain distillers grains as a carrier, providing binding and aroma. Using the coproduct from ethanol production as a medium for vitamins, minerals, yeast and enzymes provides benefits that tra-ditional molasses licks don’t. “We understand this feed is just tre-mendous but it has taken the market much longer to understand how much better it is than molasses,” he says. “They were just so steeped in molasses that it’s been hard to change some of that traditional thinking.”
First, molasses licks melt in extreme heat, which was a factor this summer during drought conditions, especially in areas such as Texas and Oklahoma, Thornberg says. Another big benefit is that distillers grains is more easily digestible for ruminant animals because it’s a pre-fermented product. A university-led feeding trial showed that in a maintenance diet, a beef cow will eat 25 per-cent less hay when supplemented with SweetPro compared to no supplements.
In most of the dairy and cattle feeding industries, distillers grains is fed as a raw energy source. “Our approach is really quite different—it’s not a high percentage of the diet,” Thornberg says. “It’s just part of the carrier to deliver their vitamin and mineral supplement, but it gives them a boost that keeps that microbial population such that they digest their forage better.”
The beef cow-calf industry is “getting their own grocer-ies” in a pasture, he points out. In order to reach this market, the company came up with a way to solidify distillers grains so it can be brought to the animals. “We’re delivering kind of a one-two punch,” he says. “It’s not just a way to get the vitamins and miner-
suPPLeMents
Feed Booster A SweetPro Feeds lick using DDGS as a carrier adds both vitamin and minerals to supplement forages and helps poor pastures go further.
PHOTO: SWEETPRO FEEDS
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als into them, it’s also a way to deliver extra protein and it’s given them a digestive benefit that helps them get more value out of the limited forage that they have.”
The ultimate result is putting more pounds on pasture, a phrase the company has trademarked. “When they are doing the normal feeding, if they use our product, instead of their normal mineral supplement, they will gain about one-tenth of a pound faster, per day,” he says. “Our view is that the beef cow producer is really in a good position to capitalize on this,” he says. “Because they can supplement their cow and wean a heavier calf and then keep that calf longer and use our tubs on those calves and just grow them faster. It’s a big dynamic change in the cattle produc-ing industry; and we’re well positioned to help the producers take advantage of distillers grains.”
The idea for distillers grains livestock licks germinated in the mid-′80s when Thornberg was the manager of the ethanol plant in Walhalla, now owned by Archer Daniels Midland Co. At the time, distillers grains was easier to sell overseas because buyers in the local market didn’t know what the product or its benefits were.
“There was no product awareness for one, but more so, the range cattle people couldn’t use distillers grains as an ingredient in feed,” he says. “So it needed to be put in a form that could be used in pasture and for nonbunkfed cattle.”
After developing a way to solidify distillers grains and other ingredients, the feed company got its start in 1991. The company secured six patents for its products between 1994 and 2004. Now, with sales growing, SweetPro Feeds is considering building a third, and possibly a fourth, production facility. “If we stay at that 45 percent, we’re going to need to have a facility in place probably by 2013,” Thornberg says. “One more year at this growth rate and we would be maxed.”
Author: Holly JessenAssociate Editor, Ethanol Producer Magazine
(701) 738-4946 [email protected]
suPPLeMents
WINTER 2012 | 15
16 |
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Distillers Grains Production & Markets or its advertisers. All questions pertaining to this article should be directed to the author(s).
DrYers
New Algorithm Aids DDGS Moisture Control, Profitability A case study demonstrates improved dryer performanceBy BRIAn DURHAM AnD ROGER DOUGLAS
CoNTRIBUTIoN
Ethanol producers are caught in a dilemma with regard to moisture content (MC) of DDGs during drying. This is caused by lack of reliable and cost-effective MC sensing and control. Most eth-anol producers avoid operating too close to
the upper specification limit and choose to over-dry rather than produce wet product that could lead to catastrophic losses from mold growth or trouble unloading railcar shipments. The costs for using the safer MC option include at least one-half percent less production, higher unit thermal energy
consumption and possible degradation of product quality by higher temperature dry-ing. An alternative option improves mois-ture control by reducing the standard de-viation significantly to move the target MC closer to the upper specification limit.
A recently installed system at one of Green Plains Renewable Energy Inc.’s 100 MMgy ethanol plants provides a case study of what is achievable using the DeltaT MC sensing and control system developed by
WINTER 2012 | 17
DrYers
Drying Technology Inc. The improved moisture sensing and control system had shown its potential by significantly improv-ing moisture control in other process in-dustries, including a related process, corn gluten production. Green Plains recognized the potential to improve their control and agreed to conduct a trial.
The plant includes two typical rotary dryers. Evaporative load disturbances are typically caused by low syrup levels and nor-mal production rate changes, as well as the deliberate bypass of some distillers grains for sale at higher moisture content. The originally installed moisture control system used exhaust temperature as the process variable for inferring moisture levels or a manual system that used downstream lab MC data as the basis for changing burner valve positions. The dead time (time lapse before detection of a disturbance entering with the feed) for control responses using “after-the-fact” MC data was too long, re-sulting in wide moisture variation. In addi-tion to dead time problems, there was no control algorithm for precisely adjusting the setpoint to obtain the target moisture level. Such operation parameters are costly and demonstrate the necessity for improv-ing current MC sensing and control capabil-ity. The exhaust temperature control system was replaced by the Delta T. A downstream, inline, infrared MC sensor was available, but not used for control purposes; it con-tinuously displays MC trends.
DTI’s exclusive technology is based on a first principles derived math model that supplied a control algorithm and an inside-the-dryer moisture sensor resulting in a control system that can significantly tighten moisture control. The model, MC = K1(ΔT)p – K2/Sq , relates: 1) the product MC exit-ing a dryer to the temperature drop (ΔT) of hot air after contact with a wet product and, 2) the production rate (S). This pat-ented new method senses the moisture of a
product while it is being dried, thus signifi-cantly reducing dead time. Additionally, it provides the theoretical basis for a control algorithm that enables precise adjustment of the setpoint value of ΔT to produce the target MC following evaporative distur-bances to the dryer.
Improvements in dryer performance promise solid returns. Drying Technology guaranteed a minimum 30 percent reduction in product standard deviation exiting the fi-nal dryer of each line. Using its operations as an example, the Green Plains plant pro-duces approximately 318,000 tons of distill-ers grains per year. Assuming the plant sells 10 percent as wet feed, the potential savings
from the remaining 90 percent of produc-tion would be $286,000 per year minimum. Total DDGS produced from Green Plain’s eight other plants with ethanol production of 640 MMgy is approximately 2.034 mil-lion tons per year. Assuming 90 percent is dried to the lower MC specification, the total corporate annual savings are estimated to be approximately $1.83 million.
Plant evaluationA pre-engineering visit was conducted
by Roger Douglas, DTI director of engi-neering, to discuss installing a Delta T on each of the two rotary dryers in line A-B for testing. The Delta T software was load-
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ed onto a desktop computer for perform-ing calculations and connected to the dis-tributive control system (DCS). The DCS supplied the necessary inline sensor data needed for the calculations. The output
signal to the burner was switched from the current system to Delta T control by a but-ton on the DCS screen. No additional sen-sors signals were used. Each dryer in the line is independently controlled by Delta T,
with the goal of reducing the MC variation from each dryer by 30 percent, which theo-retically reduces the overall standard devia-tion by 49 percent.
Figure 1 shows several days of MC
SOURCE: DTI
Figure 1 Figure 2
WINTER 2012 | 19
DrYers
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data recorded prior to installation followed by startup data for the first week of Delta T operation that showed a 41 percent re-duction in standard deviation. Since then, the Delta T has consistently operated above guarantee levels on the first line where it was installed, and has been well-received by all four operators. A benefit operators remain excited about is the ability to take a centrifuge down and bring it back online without having to worry about the dryers or the moisture of the product.
Based on the results from the 30-day
observation, a Delta T control system for the second line was installed in October and placed in auto mode on startup. Figure 2 shows be-fore and after MC data from the sec-ond line where the reduction in stan-dard deviation was 54 percent during the startup week.
The Delta T computer control
screen in Figure 3 presents data from both lines more than six weeks after installation showing 16-hour plots of MC data from the two inline IR moisture meters. Dryer line A-B was initially set on a target MC of 11.5 percent, but later shifted to 11 percent to adjust for the cooling drum MC. The C-D line was operated at a target MC of 11 percent during the entire 16-hour period.
The two main problems causing ineffec-tive MC control at Green Plains are common within the process industries. The commonly
used, nonproprietary exhaust temperature control method is ineffective due to the lack of accurate, reliable “inside-the-dryer” mois-ture sensing upon which to base control de-cisions and lack of a control algorithm that enables precise calculation of setpoints fol-lowing evaporative load disturbances entering with the feed. The resulting dead time forces ethanol producers to operate at a lower mean MC, thus costing them at least $1 per ton of DDGS. The plant trial documented the ad-ditional revenue and energy savings that was theorized prior to purchase and showed a re-turn on investment of less than a year. The operations staff at the initial installation has come to rely on the new software. After a recent planned shutdown, the software was put in automatic control even while ramping up plant rates. Plans are underway to imple-ment this technology at other Green Plains plants.
Authors: Brian DurhamProject Engineer, Green Plains Renewable Energy Inc.
(402) 315-1627
Roger DouglasDirector of Engineering, Drying Technolgy Inc.
(409) [email protected]
Figure 3 Data from both dryer lines shows 16-hour plots of moisture content data.
20 |
Over the years, many potential value-added applications for etha-nol coproducts, such as aquacul-ture feeds, human foods, and bio-based plastics, as well as new or modified processing techniques, including pelleting, extrusion, fractionation and oil extraction, have been examined. Many of these
VaLue
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Distillers Grains Production & Markets or its advertisers. All questions pertaining to this article should be directed to the author(s).
CoNTRIBUTIoN
ideas have merit and can improve the value of DDGS and WDGS. Some have been ex-tensively implemented; some have only seen limited adoption in the industry, however.
This raises the question: What is value? The answer really depends upon your per-spective. Ethanol plants are in business to make fuel and to make money. Livestock producers, on the other hand, want low-cost
feed ingredients which will result in equal, or perhaps better, performance than other ingredients, but ultimately they also want to make money. In other words, value appears to be slightly different depending on your point of view, but ultimately it boils down to economics.
Value for feedersOne way to quantify value is to exam-
ine sales price. In the past 30 years, between 1981 and 2011, the market price of DDGS has ranged from $50.70 to $209.40 per met-ric ton, with an overall average of $134.50 per metric ton (data available at www.ers.usda.gov). As with any commodity, price has fluctuated, sometimes drastically, and this year DDGS has been at record highs. Historically, the price of DDGS has paral-leled that of corn, even though it has sold at a discount relative to corn. During this year alone, DDGS sold at 73 to 92 percent of the price of corn. Moreover, it has sold at 52 to 66 percent of the price of soybean meal, its closest competing feed ingredient. A more accurate examination of price would be on
Balancing DDGS Value for Producers, Feeders Ethanol coproduct plays important role on both sides of value propositionBy KURT A. ROSEnTRATER
WINTER 2012 | 21
Focused on FeedFormerly with USDA’s Agriculture Research Service in Brookings, S.D., Kurt Rosentrater continues to focus on distillers grains as an assistant profes-sor at Iowa State University.
VaLue
a unit of protein ba-sis. Using this criteria, during 2011 the value of DDGS has ranged from $7.60 to $8.30 per metric ton per unit protein. Soybean meal has been nearly equiva-lent to DDGS, and has sold between $6.30 and $7.90 per metric ton per unit protein. Corn, however, has ranged between $25.70 and $34.40 per metric ton per unit protein. When seen in this light,
DDGS is a tremendous bargain to livestock producers!
Value for ProducersHow important are coproducts to
ethanol plants? What is their value propo-sition? During 2011, the value of ethanol ranged from $3.90 to $8.20 per bushel of corn processed, while the value of DDGS has been from 70 cents to $1.90 per bushel of corn processed. In other words, the val-ue of DDGS has ranged from 12.9 to 21.8 percent of the value of ethanol, which is actually quite substantial. Hence, DDGS is justifiably called a coproduct and not a by-product.
Another way to quantify value is to ex-amine utility. We know that ruminants con-sume the majority of DDGS in the U.S., while swine, poultry and export markets are becoming significant as well. Over the years, many feeding trials have been conducted to determine how best to use DDGS and WDGS in livestock diets. As fractionated products grow in availability, it is becoming necessary to conduct even more trials to un-derstand how to use these new products as well.
Actual use in livestock diets will depend on many factors, including species, age/size, availability, price and the price of compet-ing ingredients, as diets are formulated on
a least-cost basis. Recent literature (see, for example, the analysis published by Hoffman and Baker, 2011; www.ers.usda.gov) has es-timated that, on average, DDGS currently displaces corn and soybean meal in U.S. livestock diets at a ratio of 1.22. This figure speaks volumes about how DDGS is valued by livestock producers. But it would be use-ful to have more detailed information, and to understand how each type of coproduct is actually used in specific livestock sectors, for particular age groups. Unfortunately, a planned USDA nationwide survey of live-stock producers was canceled due to federal budget cuts, so we will not have this data anytime soon.
finding the BalanceGoing forward, what can we do to
improve coproduct value and strike a bal-ance between ethanol profits and livestock profits? For certain, we need to continue efforts to improve coproduct quality and to reduce potential problems in the industry. For example, seven years ago we faced the so-called “Ten Million Ton” question: What would we do with all of the mountains of distillers grains that would be left over once production levels reached 10 million metric tons per year? That question was resolved years ago through research, education and outreach to the livestock and international markets. To date, there have been no moun-tains—all is fed, either in the U.S. or in other countries. Five years ago, as the industry was growing exponentially, the major challenges facing the industry included:
• Flowability problems during storage and transport.
• Increasing coproduct use in species-specific livestock markets.
• Optimizing and maximizing inclusion rates.
• Improving coproduct nutritional content, quality and value.
• Utilizing next generation coproductsfrom new ethanol production processes.
• Increasing educational activities for livestock producers.
• Standardizing analytical laboratory methods.
• Fractionating nutrients into concentrated streams (e.g., high- protein DDGS, low-fat DDGS).
Some of these challenges have been overcome; others have not. And new chal-lenges have arisen in recent years. These include, to name a few:
• Mycotoxin occurrence (in raw corn and in coproducts).
• Antibiotic use during fermentation and residues in coproducts.
• Urea use during fermentation.• WDGS shelf life vs. mold and spoilage.
It is true that developing new processes for, and new products from, coproducts can increase their value. But the best and easiest way to maintain, or even increase, the value and utility of coproducts is to re-duce variability and improve the quality of the coproducts themselves—this includes both the nutritional properties as well as the physical properties. This approach will result in coproducts that are more attractive to livestock producers. Some plants have realized this and have begun to implement quality control and quality improvement programs for coproduct production. This is in addition to the existing quality program for the production of the fuel that has been used for years because of the need to meet ASTM standards.
The industry has suffered much criti-cism over the years from the outside. The ongoing food versus fuel debate persists. We in the industry understand that ethanol man-ufacturing actually produces large volumes of animal feed—nonfermentable materials that displace corn in animal diets. Perhaps we need to increase our efforts to reach out to the public to alter their perceptions of our industry. Truly, distillers grains are still our great untold story.
Author: Kurt Rosentrator Assistant Professor, Agricultural and Biosystems Engineering
Iowa State University(515) 294-4019
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