Coproducts an important part of ethanol production

There’s no doubt distillers grains is an important part of the overall ethanol business. That’s why Ethanol Producer Magazine has, for years, referred to the livestock feed ingredient as a coproduct of ethanol production—not a byproduct.

Recently REX American Resources Corp. reported pretty impressive increases in distillers prices. For the company’s third quarter, REX brought in $203.13 per ton for DDGS and $66.93 per ton for WDG. That represents a nearly 71 percent increase in DDGS compared to the same three-month time period in 2010 and an $83 percent increase in WDG. For some perspective, REX said that ethanol prices represent more than 80 percent of the company’s alternative energy segment sales. The good news there is that ethanol prices were also up nearly 58 percent in the third quarter.

In June, The Globe and Mail of Toronto, Canada, reported that Murphy Oil Co. said it was making more money selling DDGS than ethanol. In a time of tight ethanol margins but higher DDGS prices, the company said it was actually making enough on coproduct sales to pay the cost of operations of the plant. Murphy Oil owns and operates Hankinson Renewable Energy LLC, a 120 MMgy plant in Hankinson, N.D., and Hereford Renewable Energy LLC, a 110 MMgy plant in Hereford, Texas.

Bottom line: ethanol companies cannot afford to take distillers grains for granted. The coproduct is an important ingredient for the feed industry and it’s an important source of revenue for the ethanol industry.

Looking ahead, we at EPM expect to see companies continue to improve and expand on the coproducts offered. The first thing that comes to mind, of course, is the ever expanding implementation of corn oil extraction at ethanol plants. Poet, particularly, has done a good job of branding it’s coproducts with Dakota Gold DDGS; Inviz, a trademarked zein; and Voila!, the company’s corn oil.

Other company’s efforts to take distillers grains and turn it into a value-added product come to mind. Laurel BioComposite LLC opened a pilot plant in Nebraska in late November, where the company is producing its trademarked Bio-Res pellets from distillers grains, a hot ingredient for plastics. (Watch for more information on this project in the Winter issue of Distillers Grains Production & Markets.) SweetPro Feeds operates production facilities in North Dakota and Kansas where it makes vitamin and mineral licks for cattle containing condensed distillers grains.

But this little blog is far from a complete list. We at EPM know there are more exciting things happening in the world of coproducts and we’ll keep working to keep you informed.