U.S. ethanol makers eye pros and cons of corn alternatives
Short supplies of U.S. corn are causing ethanol makers to look at alternatives to the high-priced feedstock, with everything from wheat to sugar under consideration as a possible substitute.
"You'd be crazy not to," said Bob Dinneen, president and chief executive of the Renewable Fuels Association (RFA). "Everybody is always looking for other things that might make them a little more competitive. They'll be looking at a variety of things as we get into the spring and summer until we get a new robust corn crop."
POET Biorefining, the country's No. 2 ethanol maker behind Archer Daniels Midland Co, this week was bidding for soft red winter wheat (SRW) in Indiana, outbidding an area flour mill for the grain, typically used for making biscuits, crackers and other food products.
POET said many of its plants have the ability to process wheat or sorghum along with corn, and using multiple feedstocks can help manage costs.
Other operators are eying sorghum, which fared better than corn last year in what became the worst drought in five decades.
Corn prices soared to record highs as 2012 production dropped more than 12 percent from the prior year, and many ethanol producers idled plants as profits sank.
A good portion of the corn crop was afflicted with aflatoxin, a problematic mold condition that can sicken animals. Aflatoxin levels concentrate during the ethanol manufacturing process, thus increasing the toxin in feed by-products.
Improving demand for ethanol, which is blended into gasoline, has spurred a recent uptick in production, but corn remains scarce.
"Wheat is more abundant than corn," said Bruce Babcock, an Iowa State University economics professor and director of the Biobased Industry Center at the university.
SRW wheat has become particularly cheap in comparison to corn. But there are other factors to consider, experts say. While wheat contains starch, which can be fermented into alcohol like corn, the alcohol yielded from it is not as robust as from corn. If a large amount of wheat is used along with corn it alters the nature of the dried distillers grains (DDGs) that ethanol plants sell as a byproduct to the livestock feed industry.
The use of large amounts of wheat mixed in with corn at a plant designed just for corn in some cases can require adjustments to equipment and operations as well as changes with ingredients such as enzymes and yeast.
And one of the biggest hurdles many producers cite is the growing extraction of corn oil as a value-added co-product. Shifting to something other than corn for a feedstock cuts into that revenue source, industry experts say.