Spotlight on Iowa

Ethanol Producer Magazine digs into the details of ethanol production in Iowa and how the industry got started.
By Holly Jessen | December 10, 2014

When Jerry Mohr, president of the Iowa Corn Growers Association board of directors, talks to politicians, he often reminds them of what happened in Iowa on Oct. 5, 2005. That’s when Iowa corn growers forfeited a billion bushels of corn in one day through the loan deficiency payment program. “It cost the government $500 million dollars. That’s when we had farm programs that didn’t work,” he said. “Ethanol was the thing that lifted us out of those government programs and got us off the dole of the taxpayer.”

Another story Mohr likes to tell is about how the industry brought livestock business back to Iowa. Cattle production had left the state and was growing in Texas, where cheap corn was sent by rail. Iowa ethanol production created a demand for corn, which leveled the playing field, and provided distillers grains as a livestock feed.

Small wonder that corn growers like Mohr are ethanol industry supporters. “Our top goal this year is to defend the RFS,” he said of the ICGA, adding that the association also wants to increase E15 availability.

The first dry mill ethanol plant to begin operations in Iowa was Siouxland Energy Co-op, which opened its doors to corn in 2001. Bernie Punt, now a field services manager for Noble Mansfield Commodity Services, served as the project manager, first board chairman and general manager for the facility. In the late 1990s, Punt was managing a 10,000-head feedlot for Farmers Co-op Society. Punt came to the conclusion that colocating an ethanol plant with an Iowa cattle operation made good business sense.

After attending a series of meetings about building an ethanol plant in Iowa, he got authorization from the co-op to pursue the idea.  He organized a group of people, who ended up as the ethanol plant’s first board of directors, and launched an equity drive. “We sold all of our equity shares in about a month,” he says.

Today, Siouxland is colocated with the feedlot Punt used to manage and has brought big benefits to Sioux Center. “It’s still a farmer-owned ethanol plant,” he says, “We’re very proud of that.”

We’re No. 1!
If Iowa were looking for a slogan, “we’re No. 1”  would be appropriate. The state produces more corn, ethanol and distillers grains than any other U.S. state. Oh, and, it’s also the leading hog and biodiesel producer. Looking at corn production alone, Iowa has produced the largest corn crop of any state for almost 20 years. In fact, according to the Iowa Corn Growers Association, Iowa produces more corn than most countries.

Boasting 40 first-generation ethanol plants, five of them wet mills, and three cellulosic ethanol projects, two of which are currently producing, the state has a total ethanol production capacity of more than 3.8 billion gallons a year. The products produced at Iowa ethanol plants added up to a gross value of $11.8 billion in 2013, according to a report prepared for IRFA by ABF Economics, Agriculture and BioFuels Consulting LLP.

Cedar Rapids could well be considered the capitol city of Iowa’s ethanol industry. Archer Daniels Midland Co. has a dry mill and a wet mill at that location. The two facilities have a combined capacity of 240 MMgy. If that isn’t enough, Penford Products has a 45 MMgy wet mill plant there as well. “More corn is processed in Cedar Rapids than any other city in the world,” says T.J. Page, communications director for IRFA.

Blend, Baby
The state is ahead of the pack in E15 market penetration as well, with 31 registered E15 stations in 28 cities, according to the IRFA. That’s more than twice as many E15 pumps than there are in Wisconsin, the state with the second highest number of E15 stations. 

Looking at E85 numbers, Iowa has 194 gas stations that sell E85, 87 of which are blender pumps, IRFA says. The most recent Iowa Department of Transportation report puts the number of flex-fuel vehicles in Iowa at nearly 283,000.

The use of midlevel ethanol blends and E85 is on the rise in Iowa, according to the Iowa Department of Revenue. The 2013 annual report showed that the use of blends from E15 to E69 increased more than 158 percent, adding up to more than 5.4 million gallons sold. E85 sales hit an all-time high as well, increasing 18 percent to a total of 11.1 million gallons sold. The trend is continuing in 2014.

Some ethanol producers in Iowa are skipping the middleman and blending E85 on site and capturing RINs (renewable identification numbers). Although not every ethanol plant blending on site is on the list, the IRFA currently publishes data on about seven plants in its monthly wholesale E85 price listing service, which it launched last summer. The largest price gap between E85 and gasoline recorded since the service started was June 23, when Absolute Energy LLC offered its customers E85 for $1.59 less than the $3.23 OPIS listed regular gas.

Learn more about Iowa's biofuels mobile education center and advanced biofuels and algae production faclities in Iowa by clicking on the links. 

Author: Holly Jessen
Managing Editor, Ethanol Producer Magazine
701-738-4946
hjessen@bbiinternational.com