Corn Oil Industry Needs to Evolve

Ethanol producers need to improve the quality, rate of extraction.
By Joe Riley | April 15, 2013

As I sit here in a hotel room, I am reminded of a recent story about the evolution of the bedbug. Disconcerting, right? Bedbugs apparently have evolved to include a thicker, waxlike exoskeleton that repels pesticides, a faster metabolism that creates more of their natural chemical defenses, and a dominant mutation to block pyrethroids. I’m not entirely sure what a pyrethroid is, but I wish the little buggers couldn’t block them.

Throughout our lifetimes things evolve. The relationship I have with my wife has evolved after several years of marriage. My children, thank goodness, have evolved in their knowledge. And more relevant to you at this moment, the ethanol industry has evolved. Now, it is no secret that markets mature, but evolution requires adaptation to the environment. 

The environment of ethanol production margins today mandates increased revenue from coproducts in order to stay afloat. Without dried distillers grains and corn oil extraction, most ethanol plants would be at the bottom of the lake after this year. But a one-time change, such as the installation of a centrifuge, doesn’t constitute evolution. To truly evolve, one must adapt to the environment and produce something of value to current conditions. 

Today, more than 300 MMgy of distillers corn oil is being extracted, but unfortunately, it is only adding value at around 38 cents per pound, well below where it could be with a bit of evolution. Demanding more than 50 cents per pound for corn oil is not that farfetched, and I predict we will see it, not only in our lifetime, but in our immediate future. Now that the value to ethanol plants of extracting corn oil from dried distillers grains has been thoroughly confirmed, it is time to turn our attention to increasing the value of this oil and removing barriers that hold down its price. What is holding us back from seeing those values are the constituents we have become accustomed to––the waxes, color, odor and the consistency of the oil. 

FFAs, Waxes, Yield 
Today only two major markets exist for distillers corn oil—feed and fuel production. Feed markets are always going to demand the lowest-cost feed formulations. That inherently puts corn oil into a battle against other fat sources that today have a more stable market. And while biodiesel production is a good outlet for corn oil today, the current free fatty acid (FFA) levels limit further expansion into the biodiesel industry.  

I envision a day in the near future where corn oil will evolve into markets such as oleo chemical, export and even food. If you think I am crazy, just think back to the evolution of the bedbug. Things evolve to stay alive, and today’s ethanol industry demands to place its coproducts into the most valuable markets.  

So how do I propose we get corn oil into those opportunities? We need to fundamentally change to increase corn oil value. We need to dramatically lower free fatty acids from today’s standard of more than 15 percent to less than 1 percent. We need to lessen or remove the wax from corn oil. And, we need to produce significantly greater volumes. 

First, the FFA and wax issue:  We know that FFAs are a limiting factor to biodiesel producers’ usage of corn oil, oftentimes limiting the total production capacity of a plant. A lower-FFA corn oil would increase demand for biodiesel. But even beyond fuel, a lower-FFA material with a profile more like that of edible corn oil would open the doors to oleo chemical and even, potentially, food-grade opportunities. These markets could push distillers corn oil prices well above 50 cents per pound, returning significantly higher profits for ethanol producers.  With this type of value created, increasing demand will push the need for increased distillers corn oil production. 

Even in today’s environment, there is a strong need to increase the volume of corn oil. The U.S. EPA projects 680 million gallons of corn oil will be needed to meet biodiesel volumes for the renewable fuels standard. It is estimated that 300 MMgy of distillers corn oil will be extracted from ethanol facilities this year, well below the demand for corn oil for biodiesel production. The biodiesel industry shouldn’t need to look towards alternative fats and oils to fill the gap. 

With close to 80 percent of ethanol plants now using some form of corn oil extraction, the need now turns toward extracting even more oil through mechanical, physical or chemical means. Surfactants are already a popular choice. 

The chemical, biological and mechanical technologies for additional extraction of corn oil have become very easy to monetize. But some of the best ways to increase corn oil volume in a plant is to focus on the plant operators. Just increasing operator training or additional automation can ensure consistent corn oil extraction and increase overall volumes being generated, even doubling them. If an ethanol plant had just two additional days of corn oil production per quarter at 38 cents per pound, the plant would net about $100,000 more revenue annually. These numbers also illustrate how extremely important it is to keep extraction equipment in good working condition.  How many days of downtime did you have last year? 

It is in these areas—removal of FFAs, removal of wax and increased volumes—that I predict ethanol producers will find their evolution. As general manager of FEC Solutions, I am excited to be bringing a technology called Corn Oil ONE into the marketplace that can achieve these objectives. I am excited about the future of coproducts value from ethanol production, and I hope you share in that excitement. More importantly, I am excited to hit my bed tonight in my hotel room. But first, I am going to check the mattress for bedbugs.

Joe Riley 
General Manager, FEC Solutions


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