In February, the National Agriculture Statistics Service (the statistical arm of USDA) published its first reconstituted “Grain Crushings and Co-products Production” report. The report offers—for the first time—comprehensive surveyed data on co-product output from the ethanol industry, and provides insight into ethanol plant product yields.
Even though only four months of data have been published so far, the report is already helping to enhance the public’s understanding of the diversity of co-products from the ethanol industry, as well as the industry’s improved efficiency. And USDA itself has already made important changes to its monthly World Agriculture Supply and Demand Estimates (WASDE) to reflect the product yields revealed by the new report. In its newly published March WASDE report, USDA states “Corn use in ethanol production is projected 50 million bushels lower based on the new Grain Crushings and Co Products Production report…Reported corn use for ethanol for October through January implies a higher conversion rate than previously assumed.” In other words, USDA maintained its projection of fuel ethanol production, but reduced its estimate of corn use for ethanol based on the observed increase in ethanol yields per bushel of corn. RFA and other stakeholders have been suggesting for years that USDA’s ethanol yield assumption was too low, but now the Department has the robust data needed to finally revise the factor.
Here are other key insights from the first four months’ worth of data from the NASS survey:
- Dry mills account for almost 90% of current ethanol production, while wet mills produce the remaining 10%. This has been common knowledge within the industry for the last several years, but there was no “official” estimate available, and thus agencies like EPA and CARB overestimated the share of production that came from wet mills (CARB still assumes wet mills account for 20% of production). This is important because dry mills tend to use less thermal energy and electricity than wet mills.
- Dry mill ethanol producers are fully drying only 53% of distillers grains production (i.e., to 10% moisture), while 32% of distillers grains are marketed in wet form and 11% are modified wet distillers grains (i.e., they receive minimal drying). The remaining 4% is sold as condensed distillers solubles. Thus, nearly half of distillers grains co-products from dry mills are being sold in wet form, or with minimal drying. This means the ethanol industry is using significantly less thermal energy for drying than previously assumed by the likes of DOE, EPA and CARB.
- Dry mills are producing a substantial amount of corn distillers oil (CDO), which is used primarily as animal feed or as a biodiesel feedstock. Production of CDO has averaged more than 208 million pounds per month so far, which indicates an annualized total of nearly 2.5 billion pounds. This is very close to our recent estimates (see pages 6–7 of our new Outlook), but again, having an “official” surveyed number is helpful.
- If it is assumed that all of the CDO is being produced by 90% of the dry mills (we know there are still some dry mills that do not have the technology to remove CDO), then we can derive an imputed CDO yield of 0.59 pounds/bushel of corn. Again, this value squares nicely with anecdotal reports from industry of average yields.
- When the moisture content of all dry mill co-products is normalized, it appears that dry mills are producing nearly 17 pounds of distillers grains and CDO per bushel processed.
- Average ethanol yields can be imputed by dividing EIA’s monthly estimate of denatured ethanol production by NASS’s estimate of corn processed. For December, the estimated average ethanol yield was 2.85 gallons/bushel. This is well above the conversion factor previously used by USDA for WASDE and other purposes, and above the 2.8 gallons/bushel factor used as a general “rule of thumb” across the industry. Remember, this average includes both wet mill and dry mill yields. Because wet mills tend to yield slightly less ethanol per bushel than dry mills, the average yield for dry mills was probably closer to 2.88–2.89 gallons/bushel in December.
- Ethanol plants are also capturing a significant amount of carbon dioxide for industrial purposes, such as bottling, meat packing, dry ice manufacturing, and many other uses. To date, ethanol plants have captured an average of nearly 214,000 tons of CO2 per month. That means an average of 1 pound of CO2 is captured per bushel of corn processed for ethanol.
Over the past year, RFA has interacted regularly with NASS officials to ensure the survey was technically sound and as unobtrusive as possible. NASS personnel have been highly responsive to feedback, open to suggestions, and have demonstrated the utmost professionalism throughout the process. To date, the program has been a big success and is already providing badly needed data and information to help enhance the public’s understanding of our industry.