Grain elevator operators should be planning now on how they can adapt to the changes ethanol production will bring to their industry, a Texas AgriLife Extension Service specialist said.
Dr. Steve Amosson, AgriLife Extension economist, told more than 90 people attending the Texas High Plains Grain Elevator Workshop in Amarillo that expanded ethanol production is a given if the nation is going to meet the renewable fuels mandate.
While the ethanol industry has flattened out for the past year, Amosson said, mandates call for 11.1 billion gallons of renewable fuel to be used this year. Figures go upward from there to 36 billion gallons of renewable fuels by 2022.
The renewable fuels must be biodiesel, ethanol and undifferentiated advance biofuels. At this time, the primary source of renewable fuel is grain-based ethanol, he said.
It takes one bushel of corn to produce 2.8 gallons of ethanol, and the by-product of that is 17.75 pounds of distiller’s grain, he said.
“Why should you be interested in what the ethanol industry is doing?” Amosson asked those attending the meeting. “It presents a challenge for the grain elevators. If that corn goes directly to ethanol plants, it will be a direct reduction of throughput for your elevators.”
In addition, he said, grain elevators could see an indirect reduction or change because the cattle industry will have less of a requirement for feed grain and more for distiller’s grains. But feedlots are not going to want to be in the business of storing distiller’s grain.
“Do you have a plan?” Amosson asked. “If the mandates are met, we’ll produce a lot of distiller’s grains which will replace a substantial portion of the corn in rations.”
He said grain elevator operators should begin working now on how their storage capabilities, market connections and transportation connections can best play into this change.
“Be thinking of a plan where you can be that middleman and fill the gap,” he said. “Things are changing, and you need to be ready to adapt.”