Among the wide-reaching impacts of the ethanol boom, American agriculture is facing a significant shift in its transportation infrastructure.
Across the Corn Belt, farmers traditionally have trucked most of their corn to local elevators. From there, trucks and railroad cars haul the grain to livestock feeding areas, or to river barges for eventual shipment overseas.
Today, corn growers have a new set of customers — ethanol plants — sprouting, in most cases, a corn-cob’s throw from the fields that supply their fermenters. Increasingly, farmers haul their corn directly to the distillery, while the transport sector adjusts to shipping fuel to the cities and distillers’ grains to livestock producers.
Frank Dooley, an agricultural economist at Purdue University, says that as the ethanol industry expands “It is conceivable that Indiana might become a net importer of corn.” This shift from the past, he adds, “will have profound implications for the grain transport system and associated agricultural and transportation businesses.”
Dooley notes that construction of one ethanol plant that produces 100 million gallons per year reduces rail shipments of corn out of the state by 10,000 cars per year. A plant of that capacity, he adds, will produce about the equivalent of nine rail cars of ethanol and nine cars of dried distillers’ grains per day.
Researchers at Iowa State University also have analyzed the trend and issued a report titled “Sourcing corn for ethanol: Impacts of local processing.” The report notes that Iowa ethanol plants currently produce about 4.3 million tons of distillers’ grains, and the volume could grow to 22.5 million tons, if all announced ethanol plants come on line. Ethanol plants located close to cattle feedlots can save energy by selling wet distillers’ grains, which currently account for about 25 percent of production in Iowa. Plants dry most of their distillers’ grains, and the process accounts for 35 to 40 percent of their energy costs.
Meanwhile, the report notes, local demand for corn could exceed storage capacity. Ethanol plants need sufficient local storage to provide steady supplies through the year, and the industry eventually could consume most of Iowa’s corn crop. This is in contrast to the traditional corn market, where the infrastructure included about one billion bushels of “mobile storage” in trains, barges, export elevators and river elevators, the researchers say.
Through a survey of ethanol plant representatives, the ISU researchers found that plants have, on average, storage capacity for less than 8 percent of their annual corn supplies, and most do not receive grain shipments by rail. They need carefully timed deliveries by truck, and some offer price incentives for deliveries at specified times.
The majority of plants in the Iowa survey have rail access for outgoing shipments of ethanol and distillers’ grains but, again, not much storage capacity. On average, the plants can store 5.1 days of production of wet distillers’ grains and 8.4 days of production of dried distillers’ grains, or 2.6 percent of annual production.
The wet product, at 50 to 65 percent moisture, is more perishable and costly to ship. The market for wet distillers’ grains is limited to about a 50-mile radius of the plant, with most shipping by truck. Plants with feedyards nearby can benefit from reduced energy expenses for drying the byproducts, and the feedyards capitalize on the lower-cost feed.