IDGC: Industry must focus on consistency

By Erin Voegele | October 06, 2008
Web exclusive posted Oct. 23, 2008 at 11:16 a.m. CST

The 2008 International Distillers Grains Conference and Trade Show attracted more than 500 attendees and 140 foreign distillers grains buyers to Indianapolis on Oct. 19-21. The primary goal of the event is to provide buys and sellers with a network. To help facilitate the flow of information, event presentations were translated into seven languages, including Spanish, French, Russian, Japanese, Korean, Mandarin and Vietnamese. "The reason we are holding this conference is we are confident that U.S ethanol production will continue to rise; [distillers grains] available for export will continue to grow," said Ken Hobbie, president of the U.S. Grains Council.

One of the main concerns for buyers of distillers grains is the variability in quality from one shipment to the next and between the various distillers grains suppliers. Hobbie said the challenge is to help customers know - within a one percent range - the details of the product they will receive. This information will help customers formulate feed rations to maximize cost efficiency. "Although standardization of DDGS in this industry is not likely with the advent of more fractionated products, we encourage suppliers to find ways to standardize their own products and reduce the variability wherever they can," Hobbie said. As production and consumption of distillers grains increases, it will become more difficult for one supplier to fill large orders, he added. "Therefore these larger shipments will combine DDGS from a variety of ethanol plants," Hobbie said. "The better the whole industry makes their products, the higher the price they can all receive in the bulk export market."

The ability to produce consistent distillers grains products should help improve the margins for ethanol producers. Bruce Babcock, Iowa State University's Center for Agricultural and Rural Development director and professor of economics, said it's important that ethanol producers publish the nutrient content of their distillers grains. "If that information is provided, I think that over the next three or four years, the U.S. and the world [markets] will readily consume all the distillers grains the U.S. ethanol industry will produce," he said.

According to Steve Markham, a merchandiser at CHS Inc., lower profit margins in the ethanol industry are leading to production of higher quality distillers grains. Ethanol producers are trying to maximize their yields, which reduces the amount of sugar content in the distillers grains. This reduction in sugar improves flowability and increases digestibility of the product. "Distillers grains is the best value in the marketplace today," Markham said. "It's the best value per unit of energy, and it's the best value per unit of protein."

During the event, information was also presented on fractionated DDGS products. Neal Jakel, Delta-T Corp.'s DST manager, spoke of the need for industry members to work together to develop the product, determine it's value and find ways to market it. "We are in the infancy stage," Jakel said. "There are only a few hundred-thousand pounds of this product out there today."

Although the financial crisis is making it more difficult for ethanol producers to install new technologies, Jakel said it needs to be a priority. "This is a fundamental technology that will enhance the ethanol process," he said. "For ethanol plants to survive long-term, they must employ technologies such as fractionation."