Summer 2011 Distillers Grains Production & Markets

Page 1

INSIDE: SWINE RATIONS, COLOR & QUALITY, OIL OPTIMIZATION sUMMER 2011

Co-location Synergies Ethanol Plants Sited at Feedlots Provide Multiple Opportunities for Recycling Page 14

Plus Researching

Alternative Uses for DDGS Page 20

Particulars on Particulates Page 26

Charting Market Developments Page 30

www.ethanolproducer.com/distillers-grains-production-markets

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contents summer issue 2011 VOL. 01 ISSUE 01

features

14

20

CO-LOCATION

Cattle + Ethanol = A Good Match Feedlots find multiple synergies with an ethanol plant on-site.

By Holly Jessen

ALTERNATIVES

Making the Most of DDGS Researchers continue to look for higher-value uses for the coproduct.

6

Editor’s Note

Introducing Distillers Grains Production & Markets

By Susanne Retka Schill

Talking Trade

World DDGS Customers Ask: ‘Can You Meet Our Needs?’

7

Feed For Thought

8

By Alvaro Cordero

New Technologies Promise Improved Sustainability

By Kurt Rosentrater

DDG Commentary Attributing the Real Value

By Charlie Staff

10 Business Briefs

People, Partnerships & Deals

30

AIR QUALITY

MARKETS

Standards for fugitive particulate emissions may tighten.

Strong and expanding markets for distillers grains are important for a profitable ethanol industry.

Defeating Dust By Holly Jessen

By Kris Bevill

DEPARTMENTS 4

26

Evolution of the Market

By Robert Wisner

Contents CONTRIBUTIONS 36

40

44

SWINE

QUALITY

CORN OIL

Golden color preferred by some for a reason.

Corn oil extraction presents new opportunities.

Multiple Factors Limit DDGS, Even with Attractive Economics Helping swine producers minimize issues would build market.

Is Color the Only or Best Indicator of DDGS Quality? By Dr. Jerry Shurson

Customized Coproducts Needed as Industry Matures By Joseph Riley

By Harold Tilstra

sUMMER 2011 | 3

editor’s note

Introducing Distillers Grains Production & Markets

SUE RETKA SCHILL, Editor SRETKASCHILL@bbiinternational.com

ON THE COVER

A 40,000-head feedlot in Garden City, Kan., is co-located with Reeve Agri Energy, a 12 MMgy ethanol plant. WDGs produced at the plant is mixed on site and then dumped directly into feed troughs. PHOTO: REEVE AGRI ENERGY

Welcome to the first issue of Distillers Grains Production & Markets, a twice-yearly supplement to Ethanol Producer Magazine. It is fitting to dedicate time and space for ethanol’s primary coproduct—to zero in on production and marketing details and important issues of the coproduct side of the ethanol industry. Many will remember the Distillers Grains Quarterly, which made its debut in the first quarter of 2006 and quietly departed the scene after the first-quarter-issue of 2009, a victim of the recession. It will be a real help to have a publication again devoted to distillers grains and other emerging coproducts. There is so much going on in the ethanol industry that we have far more stories to write than room to run them, and as a result, coproducts have not gotten the attention they deserve. As we dig into topics for stories, we already have more ideas than possible space. But we never turn down a good story— so please, send your ideas and sources our way. Some of the best stories come from industry contacts—people at ground level who see the next big thing coming down the road, or just have a good story to tell. We also look for contributing writers. Those are the articles in the back of the book (BOBs, we call them) that are written by a wide variety of industry professionals on a wide variety of topics. They are short articles that need to be tightly focused. We ask contributors to make their articles informational and educational, with a very light promotional touch—the article itself sells the expertise of the author. Also, keep us in mind for business news regarding personnel and products and new ventures. Send your ideas and business updates to me. The easy email is EthanolEditor@ bbiinternational.com or, if you like Polish/German names, SRetkaSchill@ bbiinternational.com.

for more news, information and perspective, visit THE SCOOP BLOG AT ETHANOLPRODUCER.COM/BLOG/READ/THESCOOP

contributing authors Kurt Rosentrater is a lead scientist, agricultural and bioprocess engineer at USDA’s Agricultural Research Service in Brookings, S.D. For his Feed for Thought column this issue, he draws upon his decade of work researching ways to improve the value and utility of ethanol coproducts and developing value-added uses. 4|

Harold Tilstra, DVM, provides technical support for the distillers grain marketing group at Land O’Lakes Purina Feed LLC. He digs into the details of why pork producers shy away from high inclusion levels of DDGS in swine rations.

Jerry Shurson is a professor in the Department of Animal Science at the University of Minnesota, and a leader in the research on utilizing DDGS in animal rations.

EDITORIAL EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com ASSOCIATE EDITORS Holly Jessen hjessen@bbiinternational.com Kris Bevill kbevill@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com

PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com

SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Chip Shereck cshereck@bbiinternational.com Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Dave Austin daustin@bbiinternational.com Nick Jensen njensen@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com Senior Marketing Manager John Nelson jnelson@bbiinternational.com

Customer Service Please call (866) 746-8385 or email us at service@bbiinternational.com. Subscriptions to Distillers Grains Production & Markets are free of charge - distributed twice a year - to Ethanol Producer Magazine subscribers. To subscribe, visit www.ethanolproducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (866) 746-8385 or service@bbiinternational.com. Advertising Distillers Grains Production & Markets provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Distillers Grains Production & Markets advertising opportunities, please contact us at (866) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send Distillers Grains Production & Markets Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to sretkaschill@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

Please recycle this magazine and remove inserts or samples before recycling TM

COPYRIGHT Š 2011 by BBI International

sUMMER 2011 | 5

tAlking trade

World DDGS Customers Ask: ‘Can You Meet Our Needs?’ By Alvaro Cordero

D

istillers dried grains with solubles, a feed product almost unknown in the export trade a decade ago, is not only widely accepted in international markets today, but increasingly in demand. U.S. DDGS exports more than doubled from 2007 to 2008, increased roughly 25 percent in 2009 (despite the worldwide recession), and by 2010 were double the 2008 level. We see demand growing in several ways. More countries are importing DDGS, and on an individual country level, imports are higher. That’s because more livestock feeders are adopting DDGS, and as they gain experience using it, they increase their inclusion levels. The top 10 export markets for U.S. DDGS, which imported almost 4.7 million metric tons (mmt) in 2009, are projected to nearly triple their purchases to more than 12.5 mmt by 2013. The underlying dynamic behind DDGS demand is the same one fueling demand for corn and other grains: a growing world population that is also experiencing economic growth. Not only are there more people to feed, but more people who can afford (and want) to improve their diets with more animal-based proteins. For example, the USDA is forecasting a long-term economic growth rate of 7.9 percent in India and 8.3 percent in China. Worldwide economic growth is projected at 3.4 percent, compared to world population growth averaging 1 percent. In another projection, the World Bank sees the number of households with incomes of at least $16,000 per year increasing from 352

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million in 2000 to 2.1 billion by 2030. The number of low-income consumers who escape from poverty is the most important factor that will determine the future global demand for food. These projections translate into pressure to produce a lot more meat, poultry, eggs and milk. The U.S. Grains Council, which has made DDGS market development a top priority for nearly 10 years, sees plenty of real-world evidence to support the USDA and World Bank projections. In the past five months, council DDGS seminars in countries like Peru and Ecuador have sparked widespread interest among livestock producers, leading to Peru’s first DDGS purchase since 2007. In southern Mexico, feed millers are looking for ways to incorporate DDGS as a regular component of feed rations. DDGS makes sense for them. In Egypt, DDGS is now in use in rations for poultry, dairy, beef cattle and aquaculture (a relatively new industry). In Turkey, officials are reportedly considering accepting key biotech corn events, a step that could open that important market to DDGS shipments by later this year. Most exciting of all is the potential in China, where significant DDGS purchases didn’t kick in until September 2009. China’s monthly imports grew steadily through the end of 2009, dropped back in early 2010, then climbed past 2009’s highest monthly record in May 2010. Despite a countervailing duty announced by the Chinese government early this year, DDGS imports for January and February were higher than 2010 levels. In all, China bought more than 3 mmt of DDGS last year and has the

potential to increase significantly considering their immediate needs and continued development. While there are many positive signals for continued DDGS market growth, success won’t come automatically. This is something the council and our industry partners must continue to work on. DDGS is still a new product for many livestock feeders. They have to be reassured about product quality and consistency. They need help with issues such as flowability and handling and with proper inclusion rates and use. There also are ongoing challenges created by government policies from tariffs to biotechnology restrictions and the need for better infrastructure to control transportation costs. On sum, however, the outlook for ongoing growth in DDGS exports is good. In a world where many livestock feeders are uncertain about grain supplies and worried about price spikes, DDGS is a quality feed ingredient that gives them another option. As our international customers increase their experience with DDGS, the question we will get from them is, ‘Will you have enough DDGS to meet our needs?’ Author: Alvaro Cordero Manager of International Operations for DDGS U.S. Grains Council (202) 789-0789 grains@grains.org

FEED FOR THOUGHT

New Technologies Promise Improved Sustainability By KURT ROSENTRATER

T

he fuel ethanol and distillers grains industry may appear to always be the same, but has actually changed over the past several years—more so than most people realize. Our industry sustainably meets the growing needs for food, feed, fiber and fuel for our society as well as the rest of the world. Unfortunately, the public still hasn’t really understood our message, and many perceive our industry as a problem, not an opportunity. We have a lot of work to do to market ourselves, our products, and our benefits to society. Two key areas will have a profound influence on the long term sustainability of the industry. One thing we need to do is improve processing efficiencies, including resources consumed—energy and water—as well as conversion efficiencies and the optimization of chemicals and processing aids. Online, real-time data acquisition and control systems, coupled with statistical process control and quality improvement programs will help with this. Many plants are making considerable progress in these areas, and every year report tremendous reductions in required resources. Many in the industry also have begun to realize that they produce more than fuel. As a result, numerous plants now produce high quality coproducts, with very low variability, which is what livestock customers want. Some plants, however, still need to improve their quality control—nutrient level fluctuations and flowability problems are still prevalent, unfortunately. The corn ethanol industry definitely has a key role to play in that transition towards increasing volumes of advanced biofuels, as

called for in the renewable fuels standard. To move toward true biorefining, though, we must consider fractionation and process integration. Fractionation offers many exciting, and still untapped, opportunities to diversify our product and profit portfolios. In terms of pre-fermentation fractionation, there are several approaches to separating the germ and bran from the endosperm. For post-fermentation fractionation, there are growing opportunities as well, including size classification, air aspiration, and filtration/membrane systems. We’ve seen an exponential growth in the use of centrifuges to remove oil from stillage to be used for biodiesel production. All of these fractionation methods will, of course, lead to unique coproduct streams, beyond traditional DDGS. But the exciting opportunities have really just begun. Fractionation from the corn kernel and from coproducts will allow us to separate the higher-value components from the mid- and low-value materials. Concentrated proteins, for example, can be used for high-value applications such as aquafeeds, pet foods, human foods, bioplastics or other industrial purposes. In its concentrated form, zein protein has many unique attributes and applications in films and plastics. There are also opportunities to extract nutraceuticals, such as phytosterols, or other organic molecules for novel uses. Traditional DDGS and WDGs will continue to play key roles as livestock feed, but new types of DDGS could be produced using mid-value components from fractionation systems. The lower-value materials, such as the fiber, work extremely well as low-cost fillers in biocomposites. This is

a very exciting opportunity, because other fillers, such as wood flour, cost up to $10 per pound, whereas DDGS fiber typically costs less than a few cents per pound—an opportunity to increase the value of coproducts more than 200 times. Equally exciting is pretreating the fiber and fermenting it into additional fuel ethanol, which many see as a natural step into advanced biofuels production, since the cellulosic biomass is already available for use at the ethanol plant. Other possibilities include using the fiber and other low-value components in thermochemical conversion (such as pyrolysis and gasification) or anaerobic digestion systems to offset fossil fuels used for power and steam. Initial studies have been promising, and technology providers are beginning to take notice. Integrating these new processes into new and existing ethanol plants, and then marketing these novel fractionated products will move our industry into true biorefining and will lead the way to next-generation biofuels. All of this will take effort, but in the long term will reap considerable benefits and profits. Integrating these new systems, and making current operations more efficient, will improve the overall life-cycle assessment and sustainability of our industry. These are key steps to improving the public’s understanding of our industry. But we also need to actively market ourselves and our advancements. Author: Kurt A. Rosentrater, Ph.D. Lead Scientist, Agricultural and Bioprocess Engineer USDA Agricultural Research Service (605) 693-5248 kurt.rosentrater@ars.usda.gov

sUMMER 2011 | 7

DDG Commentary

Attributing the Real Value By Charlie Staff

D

istillers grains as a feed and food ingredient has been my passion for over 25 years, beginning with the whiskey industry and extending through the recent explosive growth of the fuel ethanol industry. At times, it has been difficult to observe those who focus solely on ethanol and dismiss the back end with a “get what you can with what we have” attitude. In many cases, distillers grains quality, consistency and value has been approached as a byproduct instead of a valuable coproduct. Understandably, the rapid growth of the industry has required learning new business principles and developing sharper management and marketing skills, leaving little time for focusing on increasing demand for distillers grains. There has been sparse communication with and little understanding of the animal feeding industry, a diverse group with varying needs who are resistant to change unless convinced there is a safe, reliable and substantial economic advantage to do so. Thanks to financial support from many, there is now a good base of knowledge gained from university animal feeding studies on the nutritional value of DDGS for most animals. There is a real need, however, to convey this information to users, as I learned this past year when talking to dairymen and other feeders. About 10 to 20 percent feed no distillers and 30 to 50 percent feed low levels. There is a real opportunity to expand DG markets by

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at least 40 percent. In fact, Dr. Daniel O’Brien, Kansas State University, reported at the Distillers Grains Symposium last year that 65 million tons of DDGS could be used in domestic animal feeds. To penetrate that potential, work is needed to improve product consistency and nutritional quality through reducing the variation in solubles, lowering sulfur levels and maintaining consistent fat and moisture content. Many fuel ethanol producers are well aware of that need and steadily are improving, but unfortunately, the industry is judged by those not focused on quality. A new area of concern surrounds “striking oil”—corn oil. Current estimates indicate 20 percent of ethanol producers have installed corn oil extraction and others are soon to follow. Two swine nutritionists speaking at the 2011 Distillers Grains Symposium in May raised their concerns that removing corn oil in DDGS will reduce the digestible energy content for swine. Animal nutritionists working with poultry, beef and dairy echo that concern. Just how much this reduction in fat content will affect nutritional energy values in rations remains to be determined, and several universities are seeking funds for studies. Widely varying fat content will be a concern, so we hope those removing corn oil will be very open and explicit with their distillers grains customers. Removing a valuable nutritional component from the animal and human food chain to be used as biodiesel

feedstock raises another concern in the food versus fuel discussion. Yet, with low margins and uncertain incentives, it is quite reasonable that the ethanol industry would want to aggressively push forward. Distillers grains are a positive contributor to the ethanol industry in other ways. Early life-cycle analyses regarding ethanol’s energy balance, greenhouse gas emissions and land use resulted in disappointingly low values until distillers grains was correctly added to the calculations. The recent Renewable Fuels Association publication, “Fueling a Nation—Feeding the World,” very importantly points out that grain used to produce ethanol also produces a valuable lower-cost coproduct used to feed animals—an important component in human food. In fact, in many animalfeeding situations there is evidence that distillers grains is a better and more economical feed ingredient than the grain from which it was produced. All of this indicates there is a real opportunity for ethanol producers to understand the value that distillers grains provides this industry. The urgent task for all is to communicate feeding values clearly before product changes are made, telling your customers what is occurring so they can make the proper adjustments. None of us like surprises. Author: Charlie Staff Executive Director, Distillers Grains Technology Council (502) 852-1575 chstaf01@louisville.edu

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sUMMER 2011 | 9

business briefs People, Partnerships & Deals

Load Toad eliminates shoveling, increases loading

The Load Toad—a new invention to make loading DDGS easier—will be rolled out at the 2011 International Fuel Ethanol Workshop in Indianapolis. Poet LLC is making the device available to the ethanol industry. “Historically producers have shipped underweight railcars or resorted to shoveling,” said Ric Plath, the new business director for Load Toad. “Shoveling is back-breaking and time-consuming, yet shipping underweight cars leaves money on the table. Load Toad’s patented technology pushes product into empty corners to help producers get the most out of their DDGS transportation (dollar).” By distributing the DDGS load more evenly and efficiently using the Load Toad, Poet plants have been able to pack 3 to 5 percent more DDGS into each car, or up to 5 tons. Commodities assistant Ryan Schroeder from Poet Biorefining-Leipsic in Ohio invented the Load Toad concept. Following his initial work on the device in 2008, a prototype of the equipment was produced and tested in South Dakota at Poet Biorefining-Mitchell. Poet engineers tweaked the design to enhance safety, capacity and various other features and, in 2010, the equipment was installed at 20 of Poet’s plants. “It felt good knowing that not just our plant would benefit, but the commodities people at all the Poet plants would benefit,” Schroeder said.

Wet distillers grains and syrup from the 21 MMgy Kawartha Ethanol Inc. plant in Havelock, Ontario, will be used in a co-located anaerobic digester. Kawartha Biogas Inc. hopes to begin construction on the biogas facility later this year and complete commissioning by the spring of 2013. The facility will produce about 9.8 megawatts of power to be sold to the grid plus about 980 kilowatts used for operations. Although the biogas facility won’t provide power for the ethanol plant, the two companies will work together to reduce natural gas use through waste heat capture. In addition to DDGS and syrup, the digester will utilize waste fats, oil and grease and cow manure. In addition, the company may use glycerin from a proposed biodiesel plant.

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“Distillers Grains: Production, Properties, and Utilization,” edited by Kurt Rosentrater and Keshum Liu, will be released July 15. Both editors work with the USDA Agriculture Research Service, Rosentrater in South Dakota and Liu in Idaho. The hefty, 574-page reference book provides a comprehensive overview of DDGS. It provides information on the U.S. fuel ethanol industry and presents research summaries on traditional uses in feeding cattle, swine and poultry. The book includes information on the physical and chemical aspects of DDGS, and explains its composition and nutritional properties, including both corn and other starch-rich ethanol feedstocks. It also covers work done on new uses, such as feeding fish and other animals, use in human foods, in industrial materials or as a feedstock in thermochemical or anaerobic conversion technologies. The book will be available online at www.aocs.org/store and www.crcpress.com/product/ isbn/9781439817254.

BUSINESS BRIEFS

RFA: DDGS makes significant contribution to feed market

Distillers grains production is often overlooked in corn equations. For example, the USDA estimates that 5 billion bushels of corn will be used for ethanol in 2010-’11, but the number is a gross estimate that does not factor in the use of DGs as a feed replacement to corn. Once feed use is brought into the equation, the net usage of corn by the ethanol industry this season will be about 3.5 billion bushels, the Renewable Fuels Association stated in a recent report. The analysis, “Fueling a Nation; Feeding the World,” shows that the annual volume of distillers grains products produced by the ethanol industry has grown by a factor of eight over the past decade and is continuing to climb. Approximately 35 million metric tons of distillers grains were produced in the 2009-’10 season, and an increase to 39 million metric tons of product is expected this season. When compared to corn production, the RFA said the amount of distillers grains produced this season would rank as the world’s fourth largest corn crop. The average price paid in 2010 was 20 cents per pound of protein in a ton of distillers dried grains, according to the analysis. While this price is a discount for buyers compared to soybean meal, the product still represents an increasingly important income opportunity for ethanol producers, the RFA said. The total estimated market value of distillers grains products last season was $3.8 billion, according to the analysis.

ICM Inc. has filed for patents on its newest development in the field of corn oil separation, its trademarked Advanced Oil System. The next-generation technology solves the issue of reduced corn oil yield due to emulsification—the biggest barrier ICM and other technology providers have encountered in delivering consistently high oil recovery rates, according to the company. The Advanced Oil System design uses a novel approach to deliver a much higher conversion rate than is currently possible. The system consists of separate skid-mounted units that can be installed at plants without oil extraction technology, or as an add-on to plants that already have invested in ICM’s first-generation corn oil extraction equipment. The first commercial Advanced Oil System was commissioned in early May at an ICM-designed 110 MMgy ethanol plant.

Prairie Gold Inc. and GTL Resources USA Inc. are collaborating to produce zein protein at a commercial-scale plant, to be constructed near Illinois River Energy’s 110 MMgy plant at Rochelle, Ill. Illinois River Energy is a subsidiary of GTL Resources. Prairie Gold and GTL have been working together on the project since 2009 when they constructed a pilot plant at the ethanol plant to determine the best method to pull zein from corn kernels under specific conditions. Zein is a natural, corn-based polymer with a wide variety of uses such as biodegradable plastics, shellac and other hard coatings and also has many applications in the pharmaceutical and specialty chemicals industries. Poet LLC is the only other ethanol producer known to be working on zein production technology. Its trademarked product, known as Inviz, is produced from DDGs. Massachusetts-based Freeman Industries LLC is the one other U.S. company currently producing zein from corn gluten meal.

Lechler Inc. is offering its Series 212 low flow axial hollow cone spray nozzle to the ethanol industry. When very low flow rates and extremely small droplets are required for an application, but compressed air is not desired or available, this hydraulic nozzle can provide a fog-like mist. This can include applications such as disinfection, humidification, and coating with water, oil, or other fluids in very low amounts. This nozzle comes standard with a cylindrical strainer that helps avoid clogging of the small orifice from the fluid being sprayed.

sUMMER 2011 | 11

business briefs

New use for DDGS in plastics nears commercialization

Two Nebraska companies have teamed up to build a manufacturing facility in Laurel, Neb., to turn DDGS into a biobased additive for plastics. Major investors include Kearney Area Ag Producers Alliance members—owners of the 60 MMgy KAAPA Ethanol LLC plant in Minden, Neb.—acting through KAAPA Investments LLC. Through private investment offerings, about $8 million in equity has been raised for the $18.7 million project. “There’s ongoing efforts to secure the rest,” said Marge Lauer, executive director of KAAPA Cooperative and a board member of KAAPA Investments. KAAPA is working with start-up company Laurel BioComposite LLC, which has a licensing agreement with New Zealand-based patent holder LignoTech. The plant will be located within 45 miles of three ethanol plants to supply the DDGS needed to produce an anticipated 100 million pounds of plastic resin additive annually. Laurel BioComposite won’t create plastics, but rather process DGs with high pressure steam to create a plastic enhancer. “With certain set processing parameters, there’s actually a molecular change that occurs to the material that creates characteristics of a polymer,” Lauer said. Should the price of DGs increase, the conversion process can be used to produce LignoMAXX out of other biomass, such as corn stover, wheat straw, lawn clippings or more. The LignoMAXX product created at the Laurel BioComposite plant will be sold to buyers that will blend it with other resins and materials. “We have had extensive trialing done by the two largest plastic manufacturers in the United States, with excellent results,” she said. Although the company hasn’t announced a date for groundbreaking, it’s anticipated that the first DG resin powder will be produced in 2012 with pelletized product becoming available later.

Process Engineer Jiao Jiao will combine her knowledge in process engineering with animal nutrition at Fluid-Quip.

Jiao Jiao recently joined Fluid-Quip Inc. where she is working to analyze benefits of high-protein products in swine rations from FluidQuip’s MSC and Wet Fractionation Systems. Protein products from these systems range from 45 to 50 percent protein purity and have attractive amino acid profiles according to swine feeding experts. Jiao, who received her masters degree in chemical engineering at the University of Wisconsin, Madison, continued studies at the animal sciences department to help formulate feed rations. “As we continue to develop new processes to enhance products at ethanol plants, FluidQuip understands the need to stay connected with the feed markets to ensure that new products show value in various feed blends,” she explained.

Export Lead Alvaro Cordero is charged with marketing DDGS abroad for the U.S. Grains Council.

The U.S. Grains Council appointed Alvaro Cordero its DDGS manager, replacing Daniel Keefe, who left the council earlier this year. Formerly manager of international operations-marketing, Cordero’s new duties include traveling abroad to directly assist overseas offices in developing and assessing foreign market opportunities for DDGS, coordinating the development of marketing strategies and implementing marketing strategies.

Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Industry Briefs, Distillers Grains Production & Markets, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to sretkaschill@bbiinternational. com. Please include your name and telephone number in all correspondence.

HK Instrument Systems has introduced the HK-8 Moisture Meter. Using proprietary software developed first for the HK4 Full Spectroscopy System, the meter can take accurate and reliable moisture measurements on a belt in real time. In addition to having no moving parts and stable LED lights, the software compensates for many of the ambient and process changes that have given other systems trouble. The instrument should help ethanol producers with moisture control as DDGS exit the dryer to improve quality, reduce variability and improve efficiency. 12 |

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)ROORZ 8V RQsUMMER 2011 | 13

CO-LOCATION

Co-location Synergies Cattlemen in the U.S. and Canada have discovered the benefits of building ethanol plants with feedlots.

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CO-LOCATION

Cattle Ethanol=

A GOOD MATCH Cattlemen in the U.S. and Canada demonstrate feedlots and ethanol production are ideal companion enterprises By Holly Jessen In every case, the cattle came first. In an effort to find inexpensive and efficient ways to feed cattle—and in some cases, to get rid of excess manure and the accompanying smell—feedlot owners built or are working to build co-located ethanol plants for a steady supply of wet distillers grains (WDGs). Two companies have been doing it since 1982 and 1991—Reeve Agri Energy in Garden City, Kan., and PoundMaker Agventures Ltd. in Lanigan, Saskatchewan. For the Reeve family business it was the opportunity to produce WDGs for use at its existing feedlot. Pound-Maker was established in 1970 by Saskatchewan farmers who were looking for a market for their crops. That quest later resulted in the construction of the co-located ethanol plant.

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PHOTO: REEVE AGRI ENERGY

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Daily Ration Reeve Agri Energy feeds WDGs and water from the ethanol plant at its co-located 40,000-head feedlot.

Two other projects in the works are aiming for closed-loop systems—feeding WDGs to the cattle, using manure from the cattle as a feedstock for anaerobic digesters and using the power from the digesters to keep the ethanol plant running. One of these is an ethanol plant in Mead, Neb. Perhaps best known by its former name, E3 Biofuels, it was built in 2007 but never reached its full potential after a boiler explosion. In Vegreville, Alberta, developers hope to break ground on an ethanol plant to complete the circle of the already functioning anaerobic digesters and on-site feedlot.

Co-location Pioneers

Lee Reeve can’t say for sure that Reeve Agri Energy was the first ethanol plant to be co-located with a feedlot, but it probably was. The Reeve family built the ethanol plant in 1982, starting out at 1.5 MMgy and 15,000 head of cattle, later expanding to today’s capacity of 12 MMgy and 40,000 head. There was a big push for alternative technologies, such as biofuels, wind, solar and others, in the late 1970s, Reeve explains. The family viewed it as a good opportunity to produce some of the feed for their feedlot. They’d seen the early research and knew the value of WDGs. “It was very

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impressive,� he says. “That’s been reproven many times through the years.� In the beginning, the WDGs was the main product of value and the ethanol was more like a byproduct. There was limited ethanol production then and WDGS had not yet saturated the market, as it has today, Reeve says. In fact, the product was so valuable as a protein source that he fed part of it to his cattle and sold the rest at 120 percent of the price of corn. He then turned around and bought more corn. Today, that business model wouldn’t make sense since DDGS is sold for 80 percent the price of corn. “That’s where the world has kind of changed,� he says. There are several synergies in co-locating the Reeve’s feedlot with ethanol production. First off, the feed mill is tied into the ethanol plant, meaning the WDGs drops out of the centrifuges straight into the feed mill to be mixed with other feed ingredients. There’s no freight bill to transport WDGs because the feedlot is right next door. Steam from the ethanol plant is used to steam flake grain used in the feed rations. Unlike a traditional feed mill, where steam flakers are typically shut down at the end of the day, Reeve Agri Energy steam-flakes grain 24 hours a day. “That won’t sound like much of a deal unless you are in the feed business,� he explains, adding that it’s dif-

ficult to shut down and restart the equipment and also allows for smaller equipment because it’s running twice as long. Co-location also means energy and water savings. Because the company feeds all its WDGs to on-site cattle (at an inclusion rate of about 15 percent on a dry matter basis), the ethanol plant doesn’t require energy-hungry dryers. Fresh well water is used first for cooling in the ethanol plant, then goes to the cattle for drinking water— a real bonus in the winter because the cattle can drink it warm, saving them energy. Finally, excess water is used to irrigate nearby alfalfa crops, which are also fed to the cattle. Reeve considers the limited ethanol capacity as one disadvantage to co-locating with a feedlot. The optimal savings in transportation and energy come when all the WDGs are fed to nearby cattle, thus it wouldn’t make sense to build a 100 MMgy ethanol plant next to a feedlot, Reeve says. While there are more opportunities for colocating ethanol plants with feedlots, that’s somewhat limited, too, because there are only so many feedlots large enough. There are about 150 U.S. feedlots with 17,000 or more cattle and only a handful with about 75,000 head or more, he says. Not long after Reeve Agri Energy ventured into the feedlot/ethanol co-location

CO-LOCATION

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PHOTO: POUND-MAKER

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Creating a Wheat Market In Saskatchewan, the 12 MMly Pound-Maker Agventures Ltd. ethanol plant is co-located with a 28,000-head feedlot, both built by a group of farmers wanting to create more markets for their wheat.

business, a company in Canada followed behind. A group of farmers established the Pound-Maker feedlot in the 1970s and expanded it from 2,500 head to 8,500 head in the mid-80s. Although some have confused the name with Poundmaker Cree First Nation reservation, the facility’s name is about fattening up cattle. “It’s as simple as making pounds,� says Keith Rueve, ethanol plant manager. Lengthy investigations and feasibility ',' <28 .12: studies were conducted before building a 10,000-head feedlot co-located with a 10 MMly (2.6 MMgy) ethanol plant in 1991. *URZLQJ 3RZHU +DLU\ +LOOV /3 Production has since been ramped up to 9HJUHYLOOH $OEHUWD 13 MMly and 28,000 head today. Although ,Q HQJLQHHULQJ FRQWUDFWLQJ SKDVH 00O\ 00J\

feeding its own WDGs was part of the :KHDW for building the plant, it was motivation KHDG IHHGORW more about finding additional markets for SHUFHQW :'*V LQFOXVLRQ UDWH their$QDHURELF GLJHVWHU FXUUHQW FDSDFLW\ grain, Rueve says. The cattle business is very cyclical and the idea was to share 00J\ H[SDQGLQJ WR 00J\ XVLQJ some risk and end up with a more stable PDQXUH VODXJKWHUKRXVH E\SURGXFWV FDQROD FUXVKLQJ E\SURGXFWV JO\FHULQ business overall. Similar to Reeve Agri Energy, PoundMaker enjoys synergies between the two businesses. Feeding WDGs doesn’t just save on energy, it was a huge capital savings when the plant was built, Rueve says. The facility doesn’t require dryers or evaporators. Pound-Maker feeds about 30 percent WDGs, which has a moisture content of about 75 percent. In addition, the cattle

drink the thin stillage from the ethanol plant, which contains about 8 percent solids. “We pump it directly to the bowls the cattle drink from,� he says.

Out with E3—In with AltEn

Perhaps no one was more disappointed when the $90 million E3 Biofuels project failed to reach full capacity than former CEO and majority owner Dennis Langley. In 2007 a boiler explosion early in the startup process kept the 23 MMgy plant from fully commissioning and ultimately resulted in bankruptcy. “I’m not sure that there was ever an achievement of more than 30 percent of capacity past 10 days,� he says. Now, nobody is more excited than Langley that the project has new life. In 2009, AltEn LLC of Kansas was the winning bidder at a bankruptcy auction. Langley owns the company that owns the feedlot and is an investor in AltEn. “The bankruptcy took longer than anybody thought possible, including me,� he says. The plant, newly renamed AltEn LLC, was then mothballed with the intention of eventually starting it up again. It will likely start producing again this year, depending on how quickly the boiler can be replaced and other minor modifications made, Langley says. If not, the company will wait until next year rather than work on the start

up through the winter. The next step is to go on to do other closed-loop projects like this one, something that was part of the original plan. “It’s a very important evolution of the ethanol industry,� Langley says. “It could be a big shot in the arm for the entire industry and for green energy, period.� The answer to what the company will do to make the project a success this time around is a simple one for Langley. It’s all about making sure the boiler doesn’t explode, he says with a laugh. The frustrating thing about the boiler mishap is that it’s a common and well-understood part of the process in many industries, not just ethanol production. In his years in business, Langley has been part of many boiler startups, none of which ended in explosions. The bigger questions about the project, such as the efficiency and capacity of the anaerobic digesters, yielded better-than-expected answers. The two 4 MMgy digesters operated at above capacity during testing that lasted six months for one digester and a year for the second one. Originally designed to provide 90 percent of the natural gas needs for the ethanol plant, the digesters outperformed that, and will actually provide 100 percent of the plant’s power needs. In other words, the new technology—the digesters—wasn’t the problem. The estab-

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CO-LOCATION

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Plan B Dennis Langley was involved in the ill-fated E3 Biofuels plant that failed to start up, pictured here as construction neared completion.

lished technology—the boiler—failed. To use a basketball analogy, “we shot 100 percent from the three point line and blew the layup,� Langley says. Besides feeding 100 percent of the WDGs to the cattle, 100 percent of the manure will go to the digester, plus the thin stillage from the ethanol plant. In addition, the company plans to take advantage of local waste streams, such as from restaurants, slaughterhouses, dairies or grocery stores. Although those items aren’t closed-loop feedstocks, the advantage for the ethanol plant would be collecting tipping fees from the businesses happy to get rid of their waste. At the end of the digester process the company will have a bio-friendly fertilizer for additional revenue. It also answers the critics that complain ethanol production takes petrochemical fertilizers to produce the feedstock for traditional ethanol production. “We actually give back more fertilizer than we take, by a long shot—by a factor of three,� he says. Producing biogas for the ethanol plant’s power means it’s extremely energy efficient. The only outside energy use will be electricity, basically to turn on the lights, and gas for the vehicles driving around the facility, most of which will be E85 flex-fuel vehicles. “We literally have a 41 to 1 ratio,� he says. “In other words, for every Btu of

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fossil fuel that we use, we create 41 Btu, so we are by far the most efficient. Far more efficient than cellulosic, far more efficient than traditional ethanol, but that’s because we don’t use fossil fuel.� Putting the three elements together— feedlot, digester and ethanol production— provides some serious positives. “It just makes good sense,� he says. “Not just environmental sense, but dollars and cents sense as well.�

Growing Power

Highmark Renewables is the newcomer to the feedlot/ethanol plant co-location game—at least in that its ethanol plant has yet to be built. In other ways, specifically anaerobic digestion, Evan Chrapko of Highmark makes the case that the company is the world’s foremost expert on the subject, particularly with open pen feedlots and multiple feedstocks for the digester. “We’re pretty proud of having cracked the code on this one,� he tells EPM. All in all, the project has been 11 years and $25 million in research and development in the making, with building the ethanol plant the last step to complete the circle. The story starts 11 years ago with manure. Brothers Bern and Mike Kotelko, owners of an Alberta feedlot, were concerned about smell, overloading the soil in

the vicinity of the feedlot and the threat of possible contamination to the water table. Thinking to the future, the brothers established Highmark as an R&D company, of which they are now majority owners along with Evan and Shane Chrapko, who serve as co-CEOs of the company. Highmark Renewables developed the company’s anaerobic digester technology, the Integrated bioMass Utilization System, or IMUS. This spring, the company received a patent for its Integrated bioRefinery technology, which pairs anaerobic digestion with other bio-production systems for ethanol, biodiesel or algae, plus other add-on options. The company, which also offers its technology for licensing, is working to demonstrate the Integrated bioRefinery technology in Vegreville, Alberta, using the feedlot that prompted the R&D in the first place. Two on-site anaerobic digesters have been operating for the past six years, starting with a capacity of 100 tons of manure a day. In February an expansion wrapped up, bringing the capacity to 250 tons per day, or half the daily production of manure at the feedlot. The next phase is to increase the anaerobic digester up to 480 tons per day as well as build the co-located 40 MMly ethanol plant, Growing Power Hairy Hill LP. When it’s all said and done, the anaerobic digesters will have a total capacity of 200 MMgy. Besides producing power, the

CO-LOCATION

61$36+27

Feedlot Alley An aerial view shows the 36,000-head feedlot in Vegreville, Alberta, where there are plans to build a 40 MMly ethanol plant as the last step in a closed loop system.

digestion process results in a pathogenfree high-value fertilizer product as well as a significant amount of nutrient-rich water that is recovered and used for crop irrigation. The goal is to break ground on the ethanol plant sometime this summer or fall, or, if that doesn’t happen, early next year, Chrapko says. In late April, the company had 25 percent of the detailed engineering done and was working on getting bids. Once that process is completed the next step is financing the project, which has already received millions in funding from various sources. With a closed-loop system, as the Vegreville project will be, all three main products, or legs of the stool, are important. The WDGs is the input for the cattle, the manure from the cattle becomes the input for the digester and the power from the digester runs the ethanol plant. The tricky part, he says, is sizing everything just right. “You’ve got to do some intense calculations when you are closing the loop like this,� he says. For the feedlot, the fifth or sixth largest in Canada and in the top 20 in North America, having a co-located source of WDGs is going to be very valuable. Not only do cattle prefer WDGs to other rations, but the high moisture content means they require less drinking water. Plus, with

PHOTO: HIGHMARK RENEWABLES

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the ethanol plant next door there’s no need to transport the water-heavy product long distances. “It’s way more efficient to send the wet distillers grains to the feedlot,� he says. Chrapko also mentioned the energy savings for ethanol plants not requiring dryers. The good news doesn’t end there, however. Not having dryers will mean much smoother operation of the plant overall. “Jokingly, or not so jokingly, 50 percent of more of your operational snafus, hiccups and problems are in your dryers operation,� he says. The digester will actually use four feedstocks. Besides manure, the company will also use specific amounts of byproducts from a slaughterhouse, such as blood, waste from a canola crushing plant and glycerin from a biodiesel plant. Anaerobic digesters are really just giant stomachs, Chrapko says. Like a person’s stomach, throwing in anything willy nilly could result in sickness, or even death. In other words, digestion could come to a screeching halt. It’s also a lot like baking a cake—a really gross cake—with ingredients like blood and manure. Like baking a chocolate cake, anaerobic digestion requires following a recipe with specific ingredients, amounts, temperatures and time periods. That doesn’t mean, however, that Highmark’s digester technology is lim-

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ited to only those four feedstocks. Other options are thin stillage or WDGs, dairy waste or separated organics from a city’s recycling program—the list goes on and on. “We have thousands of different recipes comprised of 40 different feedstocks,� he says. When completed, the digesters will produce 2.4 megawatts of electricity for the ethanol plant, biogas plant and feedlot, in addition to 8 gigajoules of heat and steam for the ethanol plant. The remainder, in the neighborhood of 200 to 500 kilowatts, will be exported to the grid. Thanks to the power generated by the digester, the project will cut grams of carbon per megajoule of energy output by easily 20 grams or more. That’s lower than Brazilian ethanol, lower than cellulosic ethanol and lower than the requirements of the Low Carbon Fuel Standard coming out of California. “We’re not talking about old school ethanol, your grandfather’s ethanol, generation-one stuff,� he says. “We’re getting generation two outcomes, without any technology risk. We are doing it now with essentially generation-one components, cleverly put together.� Author: Holly Jessen Associate Editor, Distillers Grains Production & Markets (701) 738-4946 hjessen@bbiinternational.com

sUMMER 2011 | 19

ALTERNATIVES

Making the

Most of DDGS Researchers coax more products and income streams from distillers grains By Kris Bevill

Historically, distillers grains products have served as a revenue source for ethanol producers and a feed product for livestock producers. The Renewable Fuels Association estimates that

the nearly 31.5 million metric tons of distillers grains products produced during the 2009-’10 marketing season had a market value of about $3.8 billion. June prices for DDGS ranged from about $195 per ton to nearly $245 per ton, up almost $100 per ton compared to last year, according to CHS Inc. Considering that about 17 pounds of distillers grains is produced from each bushel of corn that enters an ethanol plant, sales of distillers grains can add a significant portion to each plant’s bottom line. But as diversification is seen as a necessary strategy for continued profitability in the ethanol industry, researchers see a time when distillers grains will be used for more than feed. Diversifying uses for distillers grains can provide multiple revenue streams and contribute to the increasing need for renewable fuels. Several projects currently are exploring how to make the most of ethanol’s most abundant coproduct.

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ALTERNATIVES

Start Small Pavel Krasutsky, center, is developing a conversion technology that will utilize distillers grains to produce a variety of products. PHOTO: NATURAL RESOURCES RESEARCH INSTITUTE, UNIVERSITY OF MINNESOTA DULUTH

sUMMER 2011 | 21

ALTERNATIVES

Conventional ethanol plant vs. integrated biorefinery There are many potential feedstocks for cellulosic ethanol, but aside from corn stover, switchgrass and miscanthus, most have only small-scale potential. Distillers grains offers an ample amount of feedstock already conveniently located at ethanol production facilities, which makes it extremely attractive.

Corn ethanol plant

Corn ethanol plant/biorefinery

Biodiesel 5 MMgy Etyl alcohol, 55 MMgy Ethyl alcohol, 55 MMgy +5 MMgy 2nd-gen

55 MMgy Ethanol plant DDGS, 181,171 ton

Corn zein 1,811 ton

HPDG feed product 126,819 ton

SOURCE: PAVEL KRASUTSKY, NATURAL RESOURCES RESEARCH INSTITUTE, UNIVERSITY OF MINNESOTA DULUTH

Take All You Can Get

“The economics of ethanol plants is softening,” says Pavel Krasutsky, chemical engineer and director of the Chemical Extractives Program at the Natural Resources Research Institute at the University of Minnesota Duluth. “If we can find some additional value-added products, we can improve the economics and make it sustainable.” In 2004, Krasutsky began researching methods to produce other products from DDGS, firmly intent upon not destroying the DDGS as a feed product in the process. He wanted to improve its feed quality so as to increase its market value, and he wanted the DDGS to serve as a fuel. His project quickly yielded some unexpected results. “We found that if we extract products from DDGS using ethanol, we have two parts valuable for biofuel—fat material, which can be used for biodiesel production, and solubles, which can be converted to more ethanol,” he says. “At the same time, after extraction of these products from DDGS, we increased the protein level of DDGS from 28 percent to nearly 40 percent.” Lab and early pilot plant test results indicate that

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corn ethanol plants could increase their ethanol production using this method by nearly 10 percent. Add to that another 10 percent of biodiesel, and the overall increase adds up to a process which Krasutsky says could “dramatically change” the economics of ethanol production. Krasutsky is also exploring the potential of zein production using his extraction method, which would provide another revenue source for producers. The higher protein DGs produced as a result of this process should also provide a significant income boost to ethanol producers. In addition to having increased levels of the protein, the leaching process used to extract corn oil and glycerin from the DDGS also removes any residual antibiotics and water, which may be attractive to some feeders. High-protein distillers grains are also more concentrated, consisting of about 70 percent of the initial product, making them less costly to ship. A trace of the microbiocidal ethanol used as a solvent in the extraction process remains in the final distillers product, which helps maintain the product’s shelf life and as a result, fur-

ther improves the logistics of long-distance transport. Doug Tiffany, an extension production economist at the University of Minnesota who specializes in analyzing renewable energy technologies, has been working with Krasutsky on the project and says early analysis of the overall process “looks favorable,” but he hesitates to provide an expected market cost for the high-protein DGs quite yet. “We’re being conservative on what we think this high-protein distillers product would be worth,” he says. Feed trials will be part of the research effort during the pilot phase to help determine the market price and demand for the new product. “You just can’t show up to the market and say, ‘We’ve got something new, start using,’” Tiffany says. “That’s a great thing about the pilot facility. We’ll have the opportunity to make substantial amounts so we can see how it performs in feed trials.” Grants received from the Minnesota Corn Growers Association and the Institute of Renewable Energy and the Environment have helped the project move into the pilot phase, begun earlier this year with comple-

ALTERNATIVES

tion expected in July. Pilot operations are being conducted at Crown Iron Works Co. in Minnesota. Krasutsky recently received a patent for the biodiesel production process and is also working with Glycos Biotechnologies Inc. to produce ethanol from the solubles extracted from the DDGS. Paul Campbell, chief science officer at GlycosBio, says the company’s proprietary technology will be used to convert this lowvalue mixture of glycerol and sugars to ethanol first, but eventually the goal is to produce renewable chemicals such as lactic acid or isoprene. Krasutsky and others involved in the project believe that ethanol produced from the DDGS could qualify as an advanced biofuel, making it even more valuable for producers, but that remains to be determined. “Glycerol has never been used as a feedstock for ethanol production,� Campbell says. “If converting DDG to ethanol in a cellulosic process counts as an advanced biofuel, we hope the same logic will apply to our process as well.� While optimization of the process remains to be completed, Tiffany says early numbers indicate that a 55 MMgy ethanol plant could improve its annual profits by about $19 million using Krasutsky’s integrated process. “We don’t have all the answers yet, but what we see looks pretty good,� he says. “We’re looking at a pretty rapid payoff of this technology under a variety of market conditions. In the end, ethanol plants will have a broader portfolio of products to sell as they extract more value from every bushel ground.� Krasutsky admits that while the numbers look promising, there may not be many producers in the position to front the capital required to install the equipment to produce these varied products. One possible solution is for producers to team up to establish regional processing facilities. Because ethanol is used as a solvent, it would make sense to co-locate the DDGS facility with an ethanol plant and other plants could then sell their DDGS for processing. It’s an idea that should be familiar to the

many ethanol plants currently owned and operated by farmer cooperatives. “Every plant could have something like this, but it may be more practical for there to be one of these at a regional ethanol facility,� Tiffany says. Krasutsky plans to begin work on the engineering of a commercial facility immediately following the completion of the pilot project and says he expects the process to be commercially available in about two years.

Single Focus

While Krastusky and others have geared their efforts towards coaxing as many products out of DDGS as possible, other projects are more singularly focused. At the U.S. DOE’s Great Lakes Bioenergy Research Center, based at the University of Wisconsin and Michigan State University, researchers are tasked with one goal: making cellulosic ethanol production cost effective. It’s a project with many possible

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sUMMER 2011 | 23

PHOTO: JOHN GREENLER

ALTERNATIVES

Tiny Progress Jonathan Walton, a professor of plant biology at Michigan State University and associate director of the U.S. DOE’s Great Lakes Bioenergy Research Center’s activities at MSU, uses a robotic tool he developed, nicknamed GENPLAT, to evaluate the effectiveness of enzymes to break down various biomass materials.

means to the end, and one of the means being explored is DDGS. Jonathan Walton, professor of plant biology at Michigan State University and associate director of GLBRC’s activities at MSU, is responsible for the basic research and says his team is interested in the feasibility of using DDGS as a lignocellulosic ethanol feedstock. “After it comes out of the distillery, there’s a lot of polysaccharide left there, sometimes a significant amount of starch, say 3 to 5 percent, but then all of the cell walls,” he says. “So we’re treating it as a lignocellulosic material. I’ll be the first to admit that we don’t think that currently it’s going to be economical. I think everybody who works with DDGS and thinks about it recognizes this problem—in a ton of DDG there’s about 220 kilograms of glucose, which could produce about 37 gallons ethanol, and that comes out to about $5.10 a gallon. That’s clearly not economical, but the price of DDG might change, the price of gas might change. If gas were $6 a gallon, that would look pretty good.”

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Walton’s process would also leave behind protein for high-value animal feed and corn oil for other uses. He agrees that the best way to make DDGS conversion economical is to produce a suite of products, but his research at the GLBRC focuses only on the ethanol conversion. The first step in that process is to break down the DDGS samples. To do this, Walton and his team are using a machine they designed, dubbed the GENPLAT, for GLBRC Enzyme Platform, that helps determine which particular enzymes are most effective at breaking down materials for cellulosic ethanol conversion. GENPLAT is able to perform 96 assays in one test, which vastly improves the rate at which enzymes can be evaluated. Initial GENPLAT tests have indicated that beta-mannanase is a surprisingly important component of an enzyme mixture needed to break down DDGS. Walton says this finding was peculiar because DDGS contains little mannose. His theory is that mannan forms a barrier to those ever-important glucose-containing polymers, cellulose and

hemicellulose, and therefore the mannanase is necessary to break that barrier apart. Much of it remains a mystery, but Walton believes GENPLAT will play an important role in finding the answer. There are many potential feedstocks for cellulosic ethanol, but aside from corn stover, switchgrass and miscanthus, most have only small-scale potential. Distillers grains offers an ample amount of feedstock already conveniently located at ethanol production facilities, which makes it extremely attractive. “You don’t have to develop a new crop or a new infrastructure to grow and transport it,” Walton says. “It fits into the current industrial infrastructure scenario quite well. It’s just a matter of squeezing a little more value out of material that we already have.” Author: Kris Bevill Associate Editor, Distillers Grains Production & Markets (701) 540-6846 kbevill@bbiinternational.com

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Deadline: June 24th

The 2011 Northeast Biomass Conference and Trade Show offers industry experts an unparalleled opportunity to showcase their industry knowledge and expertise to biomass professionals in the northeast region of the United States. Speakers at BBI International Events enjoy: • Complimentary Registration for the Conference • Inclusion in both print and electronic marketing campaigns • Opportunity for inclusion in a weekly ‘Panel Preview’ marketing series • Exposure at a well attended, well produced industry event Don’t miss this unique opportunity. Submit an abstract today! www.biomassconference.com/northeast 866-746-8385 speakers@bbiinternational.com

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Dust Defeating

Regulators’ review of air quality could be a game changer for ethanol plants By Holly Jessen

PHOTO: U.S. GRAINS COUNCIL

Dust is inevitably created at ethanol plants whenever large volumes of grain and DGs are handled. Dust is one of the pollutants that states are required to regulate in all industries as part of National Air Quality Standards written by the U.S. EPA. The standards set the amount of particulate matter smaller than 10 microns (PM 10) and smaller than 2.5 microns (PM 2.5) allowed in the outdoor air. The standards apply nationwide and aren’t specific to ethanol plants. Currently, the EPA is in the midst of a regular review of the particle pollution standards, as required by law. After a standard is issued, or revised, the EPA will designate industry areas that attain the standard or will need further scrutiny. Another agency that regulates dust is the Occupational Safety and Health Administration, commonly known by its acronym, OSHA. The agency published an advance notice of proposed rulemaking in the Federal Register in 2009, working toward developing its standard for combustible dust, which is now going through the draft proposal and comment process.

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In an ethanol plant, particulate emissions, or fugitive dust, is generated in several locations. Depending on plant design, dust collection equipment may be needed in four areas, some of which may be combined—grain receiving, grain milling, DDGS load out and DDGS cooling, says Tracy Janssen, vice president of the air pollution control division of Camcorp Inc. The company, which is based in Lenexa, Kan., manufactures dust collection equipment that has been installed in more than 70 grain-to-ethanol plants in the United States. Typically, dust collection systems guarantee a 99.9 percent capture rate, says Wayne Mitchell, who works in business development with Agra Industries Inc., a Wisconsin-based company that manufactures and installs dust control systems for ethanol plants. A problem, if there is one, is generally related to a maintenance or mechanical issue—not the equipment itself. “Usually you can see a visible emission coming out of the stack or downstream of the blower, if there is a problem,” he says. Ethanol plants typically use a baghouse system, in which air is sucked into vents leading to the baghouse where the air is filtered. It’s basically an industrial-sized vacuum cleaner, says Howard Gebhart, an environmental compliance section manager for Fort Collins, Colo.-based Air Resource Specialists Inc. In grain-receiving areas, dust is sucked downward as corn drops from a hopper trailer into the receiving pit. The DDGS load-out area could prove to be a bigger emissions source, according to Dave Beil, principal engineer, Air Quality Permit Section, Industrial Division of the Minnesota Pollution Control Agency. The agency has asked Minnesota ethanol plants to study their dust emissions. “You can see dust coming off the top as they are loading [DDGS],” he says. “They have dust collection, but it’s difficult to capture all of it.” From the baghouse, filtered air at most ethanol plants is sent out into the atmosphere through an exhaust stack up the side

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of the elevator, Janssen says. The higher the stack is, the more any emissions in the filtered air will be dispersed. Dust capture rates depend on many factors, Beil says, perhaps the biggest of which is wind speed. Another factor is whether the receiving building only partially encloses a tractor/trailer or is large enough to hold the entire rig, or several. Although these buildings do have doors on either end, they aren’t typically closed during unloading so dust can often escape the building due to wind or even the motion of vehicles entering and exiting. The particulates captured in the baghouse or coming out of the stack aren’t the concern, however, Beil says. The focus of the studies MPCA is asking ethanol plants to do will be on dust generated inside the plant that isn’t captured by the dust collection system. “The amount of dust is really small, but it’s at ground level, it’s not coming out of an elevated stack where it has a chance to spread out and disperse,” he says. It’s true that it’s not possible to assure that all the dust generated at an ethanol plant will get collected and routed to the baghouse, Gebhart says. It’s important to note, however, that escaping dust is only considered an emissions source if it leaves the building. “Those buildings are largely enclosed, and my opinion is that you don’t see visible dust leaving the building, he says. “That would suggest to me that it’s not a large emissions source.”

MPCA has set a deadline of June 30, 2012, for Minnesota ethanol plants to submit the information. Minnesota Studies The MPCA project asking ethanol plants to submit data on the capture efficiency of their dust collection systems is in its very early stages. It will require some level of involvement by every plant in the

state, according to Beil. Under the current system for tracking fugitive dust, ethanol plants are only required to provide a “reasonable estimate” of capture rates. That’s all the EPA asks state pollution control agencies to track, Beil says. MPCA uses computer programs to predict how much dust escapes capture and how it affects ambient air quality. Moving forward, the goal is to stop assuming capture efficiencies and see actual studies, either in the field or theoretical, to get a better scientific basis for the numbers. “We felt that the time had come to nail this down,” he says. MPCA has set a deadline of June 30, 2012, for Minnesota ethanol plants to submit the information. The long time period is needed, Beil says, because there aren’t any current standards to measure capture efficiency for dust control systems at ethanol plants. Minnesota plants will likely have to hire a consultant to do the studies— the same ones that ethanol plants work with while obtaining or updating their air permits. Possible testing methods include emissions tests, wind tunnel studies or computational fluid models. “This is going to involve some first-of-its-kind work,” he says. Ethanol plants will be asked to complete the studies on their own dime, with no federal or state funding provided—at least not at this point. MPCA doesn’t have any specific information on how much the studies will cost, nor is it requiring plants to disclose that, Beil says. One thing that is known is that Heron Lake BioEnergy LLC, a 50 MMgy plant in Heron Lake, Minn., will spend up to $12,000 on a fugitive dust emissions feasibility study at its plant. That’s part of an agreement with MPCA for which the company agreed to pay a $66,000 fine to resolve alleged violations of its environmental permits—part of which will be used to complete the study. Bob Ferguson, CEO of the plant, declined to provide more details, saying the project is so new, not much is yet known about how the study will be conducted. Although it won’t work for every etha-

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nol plant, MPCA is encouraging plants to band together on this project. For example, plants with similar grain handling set-ups could hire a single consultant to do testing at one location. “A group of them could get together and pool their money, and we’re encouraging them,� he says. “It’s not always easy for a group of companies that are competitors to get together but there’s some indication that some of them are going to try.� Any Minnesota plant that wants to renew or update its air permit will be required to take part in this in one way or another. For most plants, a permit update will be required before the deadline. For some, an emissions study could show good capture efficiency rates. Others, possibly the older plants, or plants without a fully enclosed grain handling building, may not have as good results. “Some of them will have to improve their capture, I know that,� Beil says. At this point, Beil doesn’t know of any other states that are approaching particle capture efficiency as rigorously as Minnesota. The idea is for MPCA to review the information from ethanol plants, including methodology and testing data, and then share it publically. “At this point, we’re leading the way to actually try to nail it down scientifically, and of course we would eventually be sharing the information with these other states,� he says.

enclosing the area would alter the results by changing the conditions, like blocking out wind. “That’s not the way the source usually operates, so your experiment doesn’t really duplicate what’s there,� he says, adding that there are other issues with enclosing the space, such as exposing workers to diesel fumes from unloading trucks. Due to the degree of difficulty, Gebhart says, he would characterize it as more of a dust-capture experiment, rather than a test or a study. It’s also a very expensive experiment. If MPCA moves forward with the project, Gebhart believes it would be more practical to conduct it at one representative facility, rather than at multiple ethanol plants. “I see a whole host of problems and issues that would need to be worked through to really do this,� he says. Without first-hand knowledge regard-

ing MPCA’s plans for this project, it wasn’t possible for him to speculate about the motives behind requiring ethanol plants to examine fugitive dust capture rates. One thing he does know, however, he says, is that the organic- emissions tracking originally required in Colorado were not well thought through. If he were advising a client in Minnesota, Gebhart would want to get some firm answers from MPCA before embarking on any testing or experiments. How big of a concern is fugitive dust at ethanol plants? Why does MPCA believe this warrants a full-scale study? “It’s easy to propose an idea and say we need this data,� he says. “It’s often not easy to actually execute it.� Author: Holly Jessen Associate Editor, Distillers Grains Production & Markets (701) 738-4946 hjessen@bbiinternational.com

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Overblown Concern? Although Gebhart didn’t have specific knowledge about the MPCA project, he recalls when the regulatory agency in Colorado wrote a requirement into ethanol plant permits for tracking organic emissions from the wet cake pad—something Gebhart calls an unreasonable request. “We got them to relent after some discussion,� he says. “They finally recognized that it really couldn’t be done.� The problems with tracking emissions from the wet cake pad, or nailing down dust capture rates, are similar. First is the degree of difficulty in getting accurate data. One way would be to totally enclose the area being tested. However, the Catch-22 is that

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MARKETS

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MARKETS

Evolution of the

Market

As the availability of DDGS has grown, its pricing relationships with corn and soybean meal have changed STORY AND CHARTS By Robert Wisner

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MARKETS

A review of pricing relationships reveals how the DDGS market has evolved. As ethanol production, and its coproduct distillers grains expanded, there was a time lag while the U.S. livestock and poultry industry developed systems for efficiently transporting, handling, and feeding the coproduct. Feeding of DGs is now widespread in the U.S., especially in the beef cattle and dairy industries. Although the rate of expansion in ethanol production has slowed substantially from the rapid growth of the last six years, further growth is expected in the next few years and continued growth in the markets for DGs will be important for profitable ethanol production. Early projections show an 8 to 9 percent increase for the current marketing year. (See Figure 1) Tightening corn supplies have accompanied the rapid increase in corn processing for ethanol. That, in turn, has

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The explosive expansion in the U.S. corn starch ethanol industry the past few years has generated significant changes in livestock rations as the U.S. animal and poultry feeding sector sought feed cost savings by substituting DDGS for corn.

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been accompanied by rising and increasingly volatile corn and soybean meal prices. Livestock and poultry producers have been on the alert for any alternative ingredients that may lower their costs. In the early

stages of the explosive growth in ethanol production, DDGS prices were quite low and began to attract the attention of the livestock industry, especially large milk producing operations. In the past three to five

MARKETS

years, DDGS feeding has rapidly expanded in the rest of the U.S. livestock sector. Future trends in its use will be important to the entire livestock, ethanol, grain and feed sectors.

Expanded exports, plus the development of new coproducts and enhanced DGs, will continue to impact the market as it evolves.

Feed Value

Distillers grains works best in ruminant diets. For beef feeding, it substitutes primarily for corn, while in dairy rations as well as in swine and poultry feeding, it substitutes for both corn and soybean meal. The increasing DDGS price as a percentage of corn prices and decreasing percentage of soybean meal prices suggests that the strongest source of demand for DDGS is as a corn replacement. At least three different types of distillers grains are marketed in the U.S. Where ethanol plants are located close to feedlots, a portion of the distillers grains with solubles typically is sold as wet distillers grains with solubles (WDGS) or partially dried DGs labeled as modified (MDGS). Wet and modified distillers grains are moved directly to cattle feedlots, since they have limited storage life due to moisture content of 70-75 percent and 50-55 percent, respectively. Marketing of wet or modified DGs reduces ethanol production costs and

energy used in the biorefinery. For beef cattle feeding, they also have feed conversion advantages over DDGS. Users located long distances from the plants, in other regions or countries, purchase DDGS because of the limited storability of the wet and modified versions. DDGS is a medium-protein feed ingredient that replaces corn, soybean meal and other sources of phosphorus and calcium. Its percentages of fiber, protein, oil and other nutrients are concentrated to almost three times the percentages found in corn as the nearly 70 percent starch content of corn is converted to ethanol. High quality corn is important for the ethanol process since mycotoxins or other low-quality foreign substances also are concentrated nearly three-fold by weight when compared to unprocessed corn. The quality of DDGS can vary some from one ethanol plant to

another, depending on drying temperature and other management factors. DDGS is best suited for feeding to ruminant animals (cattle, sheep, goats, etc.) The digestive system of these animals allows them to convert DGs fiber into energy, while at the same time using the protein and other nutrients. Use of DDGS in hog and poultry rations is somewhat more limited, in part because of its fiber content. When DDGS is fed to these species, supplementation of some amino acids also is needed. Pork producers report that feeding high levels of DDGS during the feeding period can cause soft bellies that in turn cause problems in bacon production. DDGS from ethanol plants that remove corn oil has a higher protein and lower oil content than the typical DDGS, thus altering its nutritional content somewhat and making it more suitable for swine. Replacement ratios in substituting DDGS for corn and soybean meal vary with the species of animal being fed. Estimated replacement ratios also vary slightly among recent feeding research trials. For typical beef cattle feeding operations in the U.S., 1 pound of DDGS (dry matter basis) is estimated to replace about 1.1 pounds of corn. Very little soybean meal is used

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Figure 2 shows the marketing year DDGS prices at Lawrenceburg, Ind, as percentages of the U.S. average farm price of corn since 1980. As ethanol and DGs production have expanded, DDGS prices have trended upward relative to corn. The upward trend shows the market impact as the U.S. livestock sector discovered the value of DGs as a replacement for corn.

in typical U.S. beef cattle feeding programs, so for this species, DDGS is mainly a substitute for corn. For dairy cattle, recent research indicates 1 pound of DDGS replaces about 0.6 pounds each of corn and soybean meal. For hogs, 1 pound of DDGS replaces about 0.8 pounds of corn and 0.2 pounds of soybean meal. When DDGS is fed to poultry, the replacement ratios are about 0.6 for both corn and soybean meal. In addition, recommended maximum DDGS percentages of the ration for swine and poultry are considerably lower than for cattle because of differences in their digestive systems. Recent research indicates DGs can be fed successfully to beef cattle at very high levels, of over 50 percent of the ration. Because of the substitution ratios that vary by species, aggregate replacement of corn and soybean meal by DDGS depends on the market share being fed to the various species. Aggregate current national data on shares by species in the U.S. are not available from government sources, but indications from the ethanol industry are that beef cattle are the largest market for DGs by a considerable margin, followed by its use for dairy cows, hogs and poultry, in that order.

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Figure 3 shows daily corn and DDGS prices at western Iowa ethanol plants from October 2006 through early 2011. DDGS prices have a strong tendency to follow trends in corn prices, but not in an exact one-to-one relationship. Also, for long periods, DDGS prices have been below those of corn. With the DGs/corn substitution ratios noted above that indicate 1 pound of DGs replaces more than 1 pound of corn in cattle feeding, this has been an important source of cost saving for beef cattle feeders. For other livestock and poultry, potential cost savings vary, depending on the price relationships between corn and soybean meal.

For DDGS that is exported, even less information is available on percentage shares of use by species, but on average, significantly less is used for beef than in the U.S. and a relatively higher percentage is believed to be used for poultry and hogs. Thus, DDGS exports are believed to replace relatively more soybean meal and relatively less corn on a percentage basis than in the U.S.

Exports by Destination In the past few years, DDGS exports have grown rapidly as foreign livestock and poultry producers became familiar with its potential cost savings and ways of effectively using it as a replacement for corn and soybean meal. Currently, it appears that about three-quarters of the U.S. DGs supply is used domestically, with the remainder exported. Initially, the largest export markets for DDGS were the nearest ones, namely Mexico and Canada. However, other significant DDGS export markets have begun to emerge as seen in Figure 6, showing U.S. Census of Manufacturing export data. The census data also includes a small amount of other byproduct feeds from the brewing industry. The most sig-

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Figure 4 shows daily DDGS prices as a percentage of corn prices in western Iowa over this same period. Note the strong seasonal tendency for DDGS prices to move above corn prices, mainly in the late fall and winter months. The emergence of cold weather increases the length of time DGs can be stored, thus extending its potential market to smaller livestock producing operations where utilization of truckload delivery of DGs would not be feasible in warm weather because of storability issues. Also during this period when pastures are not available, many beef cow-calf producers use DGs to supplement feeding of roughages. As indicated in Figure 4, during the seasonal high price periods, DDGS prices have been 100-110 percent of corn prices. This price premium over corn indicates that livestock feeders were bidding most, if not all, of the value of DDGS into its prices.

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nificant of these emerging markets is China, which during the past two years has become the largest foreign buyer of U.S. DDGS. China’s consumer demand for more animal, poultry and aquaculture products is growing rapidly. China recently accused the U.S.

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Figure 5 shows the relationship of DDGS prices at Lawrenceburg to soybean meal at Decatur, Ill., since the 1990-’91 September to August marketing year. In contrast to the DDGS/corn price ratio over this period, DDGS prices have trended strongly downward as a percentage of soybean meal prices as the supply increased. In 1990-’91, DDGS was priced at about 75 percent of the price of soybean meal. By 2009-’10, it had declined to less than 40 percent of the value of meal. Its actual value depends on the species consuming it as well as the cost of synthetic amino acids and other factors that can vary over time.

of dumping DDGS into export markets and its claim is being examined by the World Trade Organization. Trade sources offer a number of reasons for China’s action, including a possible temporary over-supply in its markets as end users and handlers learn how best to use the product. Other possible explanations include retaliation for U.S. trade policies on some Chinese products. The outcome is a bit uncertain but many analysts expected that China’s imports will increase in the years ahead, thus becoming a growing influence on DDGS prices and availability for other users. For profitable ethanol production, strong and expanding markets for DGs are important. Profitable ethanol production also is important for grain farmers as well as crop input and marketing firms. Availability and cost of DGs is of major importance to both domestic and foreign livestock and poultry sectors. Expanded exports, plus the development of new coproducts and enhanced DGs, will continue to impact the market as it evolves. Author: Bob Wisner Agricultural Economist, AgMarketing Resource Center Iowa State University rwwisner@iastate.edu

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SWINE

CONTRIBUTION

Multiple Factors Limit DDGS, Even with Attractive Economics Inclusion rates could be higher in swine, if some common issues were overcome By Harold Tilstra On a volume basis, distillers grains products have become the third most used feedstuff in American production animal diets—following corn and soybean meal. This increased use has occurred in conjunction with the

rapidly increasing supply of distillers grains being produced by the dry-grind ethanol production industry. High feed grain and ingredient prices have livestock producers looking at any and all opportunities to lower feed cost. As of early May, per ton prices of DDGS were below 80 percent of

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Distillers Grains Production & Markets or its advertisers. All questions pertaining to this article should be directed to the author(s). 36 |

the market value of a ton of corn grain. The economic incentive for a livestock or poultry producer to push distillers grains inclusion levels to the highest level possible is substantial. Based on diet cost economics, livestock producers consider a series of questions that have transitioned from: ‘Can we use distillers grains?’ to ‘How much dis-

SWINE

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tillers grains can we use?’ to ‘Can we use more distillers grains than that?’ With those thoughts in mind, let’s look at DDGS use in swine; both the economic advantage to Nutrition Lead Harold Tilstra the swine producer provides technical to use more DDGS support for the and some of the reaDistillers Grains Marketing Group at sons that keep swine Land O’Lakes Purina producers from using Feed LLC. more DDGS. The cost savings from using higher levels of DDGS in swine grow/finish diets are substantial. DDGS is a source of energy, amino acids and phosphorus for the

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pig and partially offsets the use of corn grain, soybean meal, and mineral phosphorus in the diet. For a recent pricing scenario, the average cost of the grow/finish diets was about $260 per ton for corn/soymeal diets with no added DDGS. The average feed cost per ton dropped down to about $225 per ton for corn/soymeal diets with 50 percent inclusion of DDGS. In rough numbers, three grow/finish pigs consume about one ton of complete feed. So, $260 - $225 = $35 per ton savings; divided by 3 pigs = $11.67 feed cost savings per pig. With over 1,000 pigs in a typical modern grow/finish group, you can do the math‌ So, why then is not every pig consuming diets that contain 50 percent DDGS? There are a number of reasons.

Feed Handling Challenges

Two physical characteristics of distillers grains cover most of the handling challenges we hear about: bulk density and flowability. Bulk density is a predict-

able characteristic in that adding DDGS to a corn/soy ration results in finished feed that weighs less per cubic foot. This doesn’t sound like a big deal, until you start dealing with bulk feed trucks that hold 19 ton instead of the 20 ton they used to; or, your bulk feed truck driver calls you from a farm site to tell you that the feed bin that always held 12 ton won’t hold the 12 of ton of feed he had on the truck. This causes temporary inconvenience, but usually works itself out with a little better planning and scheduling of feed deliveries. Problems with flowability of DDGS or feeds containing DDGS are not as predictable and can have very serious consequences, especially for the hog producer. Occasional problems with DDGS not flowing out of transport vehicles are dealt with in a variety of ways that the industry has developed over the past few years—one example is specially designed rail cars that unload more easily. There are occasional problems with DDGS not flowing out of storage bins at feed mills. This can result in

sUMMER 2011 | 37

PHOTO: MINNESOTA PORK BOARD

SWINE

prolonged downtime for the feed mill, or a feed mixing error. We can also see flowability problems in finished feed containing DDGS at hog farms. The bins, delivery systems and pen feeders can have bridging of the feed occur, resulting in an “out of feed event.” In finisher hogs, these “out of feed events” can result in several pig deaths due to hemorrhagic bowel syndrome (HBS) that can occur after a pig that has been without feed engorges itself when feed becomes available. HBS usually occurs in larger finisher pigs, so the economic losses can be substantial.

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Carcass Impacts

Vegetable oils, like the corn oil found in DDGS, tend to be made up of more unsaturated fatty acids than a product like choice white grease. It has been shown that the fatty acid intake of the pig consistently impacts the fatty acid profile of the pig’s body fat. So what? Unsaturated fatty acids result in a “softer” fat in the pig carcass, which results in bacon that doesn’t slice well and sausage products that have less than desirable appearance in the meat case. Hog producers try to offset these effects by reducing the DDGS level to less than 20 percent of the diet the last four weeks of the feeding

period. This happens to be the highest daily feed intake period of the pig’s life. DDGS is fairly high in fiber. Feeding pigs diets that are higher in fiber results in slightly lower carcass yields; and the reduction is more severe as you increase the amount of DDGS in the diet. What does this mean? If you have pigs in a finishing system with a fixed number of days available in the finishing barn, you will be selling lighter pigs. Pigs are priced on a carcass weight basis, so that means you have less income. In some feed-ingredient and hog-carcass price scenarios, this reduction in carcass yield can offset the savings from feeding DDGS.

PHOTO: MINNESOTA PORK BOARD

SWINE

Phosphorus, Manure Issues

The phosphorus found in corn is bound in a form that is not available to the pig’s digestive process. The fermentation process at the ethanol plant makes much more of the phosphorus biologically available to the pig. At higher DDGS inclusion levels (over 20 percent of the diet) this can reduce or eliminate the need for supplemental phosphorus mineral in the diet. The phosphorus level can become high enough to result in an incorrect calcium/phosphorus ratio which can result in lameness and/or bone breakage problems in the pork processing

facility. If the correct phosphorus level of the DDGS is known, the swine feed can be formulated to correct calcium/phosphorus ratios. The high fiber content of the DDGS results in lower diet digestibility which means more liquid manure is produced. The fiber also results in liquid manure that is more viscous, leading to crusting and pumping challenges. Another aspect of feeding high levels of DDGS is that the pig’s diet ends up significantly higher in crude protein than the pig requires. The physiology of dealing with the extra protein can increase the pig’s water consump-

tion; also increasing the total amount of liquid manure produced. Most liquid hog manure storage facilities were sized based on corn/soy diets and designed for annual emptying. The extra liquid manure produced results in the manure storage facility filling up sooner than planned. There also may not be cropland available for manure application before crops are harvested. These are some, but not all, of the issues surrounding higher inclusion rates in swine rations. This should give ethanol producers and distillers grains merchandisers at least some appreciation for the factors that drive pork producers decisions on how much DDGS to put in the diets they feed their pigs. Swine represent a huge market for DDGS both domestically and internationally. DDGS production practices that help minimize the issues discussed here could help maximize the use of DDGS in swine diets. Author: Harold Tilstra, DVM National Coproducts Technical Support Land O’Lakes Purina Feed LLC (507) 283-4198 Hdtilstra@landolakes.com www.ddgsnutrition.com Land O’Lakes Inc. is a national, farmer-owned food and agricultural cooperative that markets dairy-based consumer, foodservice and food ingredient products across the U.S. and provides an extensive line of feed, seed, and crop protection products and services to farmers and ranchers. Internationally, it serves customers with a variety of food and animal feed ingredients and provides agricultural assistance and technical training in more than 25 developing nations.

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QUALITY

CONTRIBUTION

Is Color the Only or Best Indicator of DDGS Quality? Research indicates color correlates with nutritional components and physical characteristics By DR. JERRY SHURSON The color of DDGS has become a quality factor of great importance for some buyers in the export market, and it is being used to differentiate real or perceived quality and value among DDGS sources.

Several years ago, some DDGS marketers and buyers developed a subjective color evaluation system using a five-color scoring card (Figure 1). Although this DDGS color score card is still used, many marketers have stopped using it because it is too subjective and resulted in frequent arguments with buyers. As a result, many marketing contracts

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Distillers Grains Production & Markets or its advertisers. All questions pertaining to this article should be directed to the author(s). 40 |

that are now being negotiated between U.S. suppliers and foreign buyers (especially in Asian countries) contain a minimum guarantee for a quantitative measure of color, using Hunter or Minolta colorimeters. Increasing amounts of U.S. DDGS continue to be exported to various countries regardless of color, but for some mar-

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Research Review Dr. Jerry Shurson compiled results from 15 studies on color and quality in DDGS.

kets there is a significant price premium for light-colored DDGS. As a result, some U.S. suppliers have become frustrated and question the value of using DDGS color as an indicator of quality, especially if they are unable to supply DDGS that meets the buyer’s color expectations.

Why Measure Color?

Color has been used as a subjective indicator of the nutritional quality of feed ingredients for decades. In 1912, Louis Camille Maillard described the first evidence of chemical reactions between sugars and amino acids that render the amino acids (especially lysine) indigestible. These reactions commonly occur when mid- to highprotein feed ingredients are overheated during the production and drying process, and

can be characterized by darkening of color (browning), burned flavor and smell. Drying temperatures used in dry-grind ethanol plants can range from 127 to 621 degrees Celsius (260 to 1,150 degrees Fahrenheit). The nutritional significance of the Maillard reactions in DDGS has been shown in past studies on ruminants, as well as in pigs and chickens, and is responsible for losses in protein quality in DDGS. In addition, color can give an indication of the maturity of the grain, storage conditions, presence of toxins, contamination due to sand, and possible use of insecticides/fungicides, which give a dull and dusty appearance. Sorghum with an orange to red color may indicate high tannin content. Browning or blackening can indicate excessive heat treatment or spoilage due to improper storage, thus reducing nutritive value. Hunter and Minolta colorimeters have been used for many years in human food industry as indicators of nutritional and physical characteristics of heat-processed

products such as candy bars, cookies, and bread. Color is measured by reading three color characteristics specifically defined by the Commission Internationale d’Eclairage, in Vienna, Austria: L*, a measure of lightness with 0 being dark and 100 lighter; a*, measuring red-green; and b*, measuring yellow-blue. (See Figure 2) Colorimetric measurements of feed ingredients, especially for DDGS, have become common in the feed industry to assess the extent of heat damage. It is important to realize that color scores using Minolta colorimeters are lower than for HunterLab colorimeters, although the ranking of samples by color scores using both methods is the same. Therefore, if color measures are used as criteria for marketing DDGS sources, it is essential that the method used is defined in the contract to avoid misinterpretation of results.

Why Color Counts

When living and working in a global economy, it is essential to understand how different cultures around the world perceive things, the symbolic nature of how they may think, and the basis for the actions they choose to take. For example, the color yellow in Chinese culture is considered the most beautiful and corresponds with earth and the center of everything and also signifies neutrality and good luck. Furthermore, consumers in many Asian countries prefer dark yellow-colored egg yolks and yellowcolored chicken skin. Therefore, the color yellow or golden is held in high esteem and is likely one of the contributing factors to why golden DDGS is the preferred color of DDGS in many parts of Asia. DDGS color can be an indicator of nutritional value. Research done in 1948 was the first to show that excessive heat-

sUMMER 2011 | 41

QUALITY

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/ D E &RORU 6ROLG While color does correlate with certain nutrient qualities, using color as the only or best indicator of DDGS quality is not recommended. ... DDGS can be evaluated for metabolizable energy and digestible amino acids to help determine quality in feed rations, particularly for swine and poultry. / 6285&( ::: +817(5/$% &20

ing of feed ingredients can result in binding of amino acids and protein to other compounds, such as carbohydrates, thus reducing amino acid digestibility (especially lysine) in monogastric animals. A review of 15 studies done in the past two decades show findings that echo this earlier work. Research done in the 1990s showed that lysine concentrations tended to be highest in the lightest-colored DDGS sources, intermediate in the medium-colored, and lowest in the darkest-colored DDGS sources. In addition, there was a significant correlation between Hunter L* and weight gain and feed/gain in broiler chicks. When DDGS sources of similar color scores were blended and fed to pigs, performance results were similar to those observed in the chick studies. A more recent

42 |

study, however, evaluated seven sources of golden DDGS in a relatively narrow range of L* values, that showed no effect of L* on lysine digestibility in poultry, but there were significant differences in the relative bioavailability of lysine. Similarly, results from additional pig studies in the past decade showed lower amino acid digestibility in DDGS sources that had lower L* values (darker in color) compared with sources with higher L* values. Many of these studies, however, were done with relatively small samples of DDGS. Work done in 2007 using a larger number of DDGS samples—34 samples with a wide range of L* values— found that digestible crude protein and amino acids for pigs were poorly predicted from color scores. The results from these studies indicate that L* and b*, but not a*

may be useful general indicators of relative lysine digestibility if L* values are less than 50, but not if L* values are greater than 50. Although there is consistent evidence that excessive heating during the DDGS drying reduces digestibility of lysine and other amino acids, it may actually improve another important nutrient. Work done in 2007 indicated that heating DDGS may enhance its nutritional value for poultry by improving the utilization of phosphorus. DDGS are also a source of xanthophylls—the yellow/orange pigments naturally occurring in corn and coproducts that are valuable in poultry diets to produce a desired golden color in egg yolks and broiler skin. In Asia, expensive synthetic xanthophyll pigments are commonly added to poultry diets, making corn gluten meal,

QUALITY

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and to a lesser extent, DDGS, an economical substitute. One research study indicated that overheating of DDGS may cause oxidation of xanthophylls, resulting in lower concentrations. Therefore, it appears that lighter-colored DDGS is more likely to contain higher amounts of xanthophylls than darker-colored DDGS. Very little research has been conducted to evaluate the amount of oxidized oil in DDGS, which typically contains about 10 percent corn oil. Corn oil contains high levels of polyunsaturated fatty acids (particularly linoleic acid) that are vulnerable to lipid peroxidation. Increased drying time and temperature used during the drying process accelerates lipid peroxidation, which has been shown to negatively affect pig health and growth performance. One study that analyzed the oil in DDGS samples from 31 ethanol plants measured an indicator of peroxidation, finding levels about 25 times greater than corn in the samples with the highest levels. When correlated with color, it indicated darker samples may have higher levels of oxidized lipid than lighter-colored DDGS sources.

Other experiments have been conducted to understand the relationship between DDGS color and its physical characteristics finding that there is a correlation between color and moisture, water activity, conductivity, resistivity, bulk density and flowability of DDGS. Thus color may be an indicator for assessing feed storage and further processing characteristics. The amount of condensed solubles added to the coarse grains fraction to produce DDGS can vary greatly among ethanol plants, impacting color and nutrient composition. Compared to the condensed soluble fraction, the coarse grains fraction is higher in dry matter (33.8 vs. 19.5 percent), crude protein (33.8 vs. 19.5 percent), and crude fiber (9.1 vs. 1.4 percent), but lower in crude fat (7.7 vs. 17.4 percent), ash (3.0 vs. 8.4 percent), and phosphorus (0.6 vs. 1.3 percent). In one study, adding increasing amounts of solubles resulted in darker colored DDGS, and resulted in increased crude fat, ash, magnesium, sodium, phosphorus, potassium, chloride and sulfur. Added solubles had minimal effects on crude protein and amino acid content and

digestibility. As the amount of condensed distillers solubles added to the coarse grains fraction was increased, L* was reduced and a* increased. Therefore, DDGS L* and a* can be general indicators of nutrient composition changes among DDGS samples. While color does correlate with certain nutrient qualities, using color as the only or best indicator of DDGS quality is not recommended. There are more precise methods for assessing DDGS quality and value. In addition to the commonly used moisture, fiber, protein and fat values, DDGS can be evaluated for metabolizable energy and digestible amino acids to help determine quality in feed rations, particularly for swine and poultry. Author: Jerry Shurson Professor, Department of Animal Science University of Minnesota (612) 624-2764 shurs001@umn.edu

Editor’s Note: “Is Color the Only or Best Indicator of DDGS Quality?” is a condensed version of a 20-page paper, by the same title, written by the author for the U.S. Grains Council. Used with permission.

sUMMER 2011 | 43

CORN OIL

CONTRIBUTION

... is the next big opportunity with DDGs!

Customized Coproducts Needed as Industry Matures Corn oil extraction creates DDGs variability and new opportunities By Joseph Riley As we continue to see maturation in the distillers grain industry, the impact of corn oil is gaining momentum. In 2006, there were only four dry mill ethanol plants extracting corn oil from their process, and oil values were in the 12 to 15 cents-per-pound range. Contrast that with this April, when there were about 50 plants extracting oil at a value ap-

proaching 50 cents per pound. While foodgrade corn oil has been a kitchen staple around the world for many years, the use of nonfood-grade corn oil was uncertain at best in the first few years of extraction. With five years of experience, the current market for this corn oil is maturing at a rapid rate. Whereas initial deliveries of this oil were predominately into the animal feed

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Distillers Grains Production & Markets or its advertisers. All questions pertaining to this article should be directed to the author(s). 44 |

market, we now see a significant portion being used at biodiesel facilities across the Midwest. The 2011 resurgence of biodiesel has nearly doubled the value of extracted oil, Oil Optimization though what will hap- A 10-year veteran pen after the expira- of the renewable tion of the tax credits energy industry, Joseph Riley is the for biodiesel in De- general manager of cember is unknown. FEC Solutions With almost 20 percent of plants extracting corn oil (with many estimates showing up to 40 percent by the end of 2011, and 55 percent by the end of 2012), the normal DDG variability has dramatically increased to a point that the product may be considered unmanageable by some animal nutritionists. This variability is the largest reason why DDGs have been consistently undervalued compared to competing feed ingredients.

CORN OIL

Most plants sell their DDGs as they come out, purchased by the closest livestock producer or facility that will take them, pricing the DDGs based on a market price that day. In short, ethanol producers are giving livestock producers a reason to call DDGs a by-product and place it in the “commodity” category. As many industries such as food processors and petroleum have shown in the past, individual component values are significantly higher than the value of a combined stream. While past performance cannot dictate future results, the goal should be that DDG value be maximized by splitting the individual constituents of DDGs into purified streams. Most of this cannot be accomplished with existing processing and infrastructure, but corn oil extraction can be the first step in accomplishing this goal. While many facilities have been able to extract oil without having to discount their DDG price, this phenomenon will likely end in the near future. With the maturation of the DDG feed market, many consumers are becoming more aware of the value, and will likely demand discounts with reduced oil levels. This doesn’t mean that oil extraction should be left by the roadside. Instead, corn oil extraction should be strategic to the customer served by each individual plant. With the high density of plants within the Upper Midwest, the issue inhibiting a differentiated product mentality is customer defection. The commodity mentality has created a mental model with our customers that one plant’s product is the same as another. So if one seemingly reduces its value by extracting oil, they will immediately defect to the next plant in line. Most ethanol plants sit idly by while this happens. In reality, not all livestock producers require the same DDG components. Hog producers prefer DDGs with less corn oil to reduce the softness of fat in the belly

and jowl and also see the value of the energy component as a positive attribute. One ethanol facility recently lost a local customer for DDGs when it began extracting corn oil. It turned to a lower-value export market. Yet the value of the oil was far higher than the difference between local and export markets. Meanwhile, a hog producer up the road had just removed DDGs from its ration. The high level of corn oil they were receiving in the DDG from another ethanol plant was causing the packer to discount their hogs because of soft belly fat. With tightening margins within ethanol production, the producers need to reconsider their mental model of profitability. Instead of focusing 95 percent of their energy on alcohol production, they need to focus on being a true biorefinery. There are enormous opportunities to create custom products to meet customer demands, but existing plants have limited process control outside of alcohol production. This is the root cause of variability in DDG composition and quality, and until more measurement is completed, there will not be significant improvements. With increased process measurements and control, the probability of producing a higher value product is vastly improved. What is difficult to communicate and grasp is the fact that there is no “right” product out of the ethanol coproduct stream. By understanding what causes the nutritional variability in their own DDGs, a plant can identify methods to reduce this variability, thereby contributing to a higher value product stream. This would help a facility to recapture whatever value is lost in the “as-shipped” DDGs due to corn oil extraction, and still capture the full value of extracted oil. While the majority of ethanol plants are centrally located geographically, the opportunity for these plants to service dramatically different customers is available. In an ideal world, an ethanol plant would have 15 individual product streams that

would enable facilities to custom blend individual loads based on customer demand. The mentality of one-size-fits-all DDGs needs to be banished from the industry, and the commoditization mantra needs to be eliminated. There will likely never be consensus among animal nutritionists on what the ideal composition of DDGs for feeding is, even within one animal group. Ethanol plants need to produce what their customers want instead of just providing them with whatever is pushed out the backside of the plant. With increased segregation of constituents, the ability to custom blend can be presented to customers. This will maximize value to the plant and to its customers. There are several companies working to re-engineer DDGs to achieve a higher value, more consistent and specifically tailored DDG. If the ethanol industry looks to food processing as its model, it will see that as markets mature, a purified stream has become more valuable than a mixed stream. This is true because it allows for flexibility, manageability, marketability and most importantly, customization. Livestock producers would, understandably, much rather take the constituents of DDGs supplied at their local ethanol facility and formulate a ration that is best for the species, the season and the system employed. FEC Solutions, founded in 2006, provides innovative corn oil marketing solutions as well as a market for fats and oils for specialty processing. The aim of FEC Solutions is to provide solutions to the biofuels industry which enhance ethanol producer margins and promote stability and consistency in the marketplace for livestock nutrition products. Author: Joseph Riley Cofounder and General Manager, FEC Solutions jpriley@fecsolutions.com

sUMMER 2011 | 45

April 16-19, 2012

Colorado Convention Center Denver, Colorado

A New Era in Energy: The Future is Growing

CONTACT US: 866-746-8385 service@bbiinternational.com Follow Us: twitter.com/biomassmagazine

Put BetaTecŽ natural hop extracts to work in your fermentation process to replace antibiotics and enhance yeast propagation. IsoStabŽ is the natural way to effectively control gram-positive bacteria while eliminating antibiotics and harsh chemicals. Plus, antibiotic-free DDGS adds value to your co-products. VitaHopŽ Silver yeast nutrient enhances yeast performance and vitality, inducing faster fermentations and larger yields. Combined with BetaTecŽ fermentation expertise and training, these technologies will significantly increase your plant’s efficiency. BetaTecŽ‌the natural hop to higher profits. For more information specific to fuel ethanol producers, visit www.bthp.info. 4HJ(Y[O\Y )S]K :\P[L >HZOPUN[VU +* ;! -! www.betatechopproducts.com

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