Examining the Product Streams & Costs of Corn Fractionation Systems

1. Examining the Product Streams & Costs of Corn Fractionation Systems 2009 AACC International Annual Meeting Baltimore, Maryland September 14, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

2. Ethanol Production Based on the pace over the 1st 5 months of 2009 Sources: Renewable Fuels Association, Energy Information Administration

3. Ethanol Margins Source: ISU -- CARD

4. Corn Composition • Looking for: • Improved efficiency • Reduced energy usage • Reduced water usage • Diversified product stream Why Fractionate? Source: 2009 FEW Conference presentation by Reg Ankrom (CPT)

5. Information from Reg Ankrom’s ppt at the FEW conference Source: Dave Elsenbast, REG

6. Relative Prices (Jan. 2007 = 1)

7. Fractionation Technologies • MOR Technologies • Corn Value Products • Langhauser Associates • FC Stone Carbon LLC and Maize Processing Innovations • Buhler Inc. • Cereal Process Technologies • FWS Technologies • American Milling Group • ICM Inc. • POET • Renessen LLC • Delta-T Corporation

8. MOR Technologies • Combines wet and dry milling techniques • Outputs: • Ethanol • High protein distillers grains • High oil germ (food use, 42% oil content) • Bran (60% for food and 40% for feed) • Offers oil extraction technology as well • Claims a 2% starch loss from process

9. Langhauser Associates • A wet fractionation approach • Outputs: • Ethanol • High protein distillers grains • High oil germ (food use, 48-50% oil content) • Bran (80% for food and 20% for feed) • Includes oil extraction technology • Operating costs roughly 10% higher than traditional plant

10. FC Stone Carbon & Maize Processing • A wet fractionation approach • Outputs: • Ethanol • High protein distillers grains (47% protein) • High oil germ (food use, 42% oil content) • Bran • Includes oil extraction technology

11. ICM • A dry fractionation technology • Outputs: • Ethanol • High protein distillers grains • High oil germ (food use, 26% oil content) • Bran • Snack grits • Corn meal • Can include oil and protein extraction technologies

12. Capital Costs • Range from $10 million to $40 million for a 50 million gallon ethanol plant • The inclusion of corn oil extraction technologies moves costs to the higher end of the spectrum • Most vendors point to a payback period of under 3 years Variable Costs • Decreased energy needs per gallon for: • Liquidification and cooking • Distillation • Drying of distillers grains and solubles • Possible energy generation from bran • Could reduce energy demand by nearly 50%

13. Product Streams Corn costs: $3.14 per bushel, Illinois ethanol plant report (USDA-AMS, as of early Sept. 2009) Traditional ethanol plant: 2.8 gallons of ethanol @ $1.60/gallon = $4.48 17.75 lbs. of DDGS @ $92/ton = $0.82 Revenues per bushel = $5.30 Ethanol plant w/ fractionation: 2.72 gallons of ethanol @ $1.60/gallon = $4.35 13.5 lbs. of high protein DG @ $102/ton = $0.69 5 lbs. of germ @ $115/ton = $0.29 3 lbs. of bran @ $65/ton = $0.10 Revenues per bushel = $5.42

14. Tapping into Many Markets Source: 2009 FEW Conference presentation by Neal Jakel (Delta-T)

15. Ethanol Margins Source: ISU -- CARD

16. Thank you for your time!Any questions?Iowa Grain Quality Initiative:http://www.iowagrain.org/My web site:http://www.econ.iastate.edu/faculty/hart/