Data Dilemma

Corn and distillers grains numbers questioned
By Kris Bevill | August 15, 2011

The ethanol industry has met two milestones this year in USDA data reporting. Earlier this year, the agency began including distillers grains in its supply/demand report and in July, it reported that ethanol had topped the feed markets to become the No. 1 user of corn in the U.S. While both milestones may be viewed as somewhat positive for the industry, they have also brought up interesting questions as to how accurate the government’s data is and how up to date the ethanol industry is with its own numbers.

In May, the National Pork Producers Council testified before a House agriculture committee that it does not believe the USDA is accurately estimating the amount of distillers dried grains with solubles (DDGS) in its monthly reports. The USDA uses an industry average of 17 pounds of DDGS per bushel of corn to calculate its overall estimates, but the NPPC says it has anecdotal evidence indicating yields are closer to 15 to 16 pounds per bushel. “It’s not a huge reduction, but in a world that needs as many ingredients as we can get our hands on, we need to be clear about how many pounds of DDGS are being produced per bushel so we get a good accounting of it,” says Steve Meyer, president of Paradigm Economics and consultant for the NPCC. Following the July report that ethanol had become the top user of corn, the Renewable Fuels Association said it didn’t believe the USDA was accurately estimating ethanol production for the year and also did not properly account for distillers grains, which are returned to the feed market and help alleviate price pressure from corn losses.

Jerry Gidel, an associate at North America Risk Management Services Inc., says he believes the onus is on the ethanol industry to prove its yields. “The USDA does as good as they can,” he says. “The biggest problem is that there just is not a good set of information. There’s not a set of data out there that people can utilize and say, ‘Yes, we’re creating this much DDGS and our conversion ratio is this.’ We have no statistics.” 

—Kris Bevill