Looking at the economics of distillers grains

Nice piece in the Sioux Falls Argus Leader looking at the way that sales of distillers grains is helping to support the ethanol industry in the US.

Historically, distillers grain represented 10 percent of an ethanolplant’s revenue stream, said Jerry Shurson, an animal science professorat the University of Minnesota. Today, it’s closer to 20 percent to 25percent, he said.

Which is nice to have, but if the volume of ethanol keeps on growing then the supply of distillers grains will continue to increase. This might reduce the price of distillers grains, but since it takes about three pounds of corn to produce about one pound of grains (the other two are converted to ethanol and carbon dioxide gas), this may not matter because producing ethanol and distillers grains takes corn out of the market.

Not all of the people in the report are happy about that. Especially those who live a long way from distilleries.

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One Response to Looking at the economics of distillers grains

  1. larry hagedon 11 September, 2008 at 11:53 pm #

    The problem with commodity agriculture for many generations now has been the tendency for farmers to over produce and crash their markets. This is why the federal government pays farmers billions of dollars to not farm millions of acres.

    We will not reach the limits of corn based ethanol production by producing too much ethanol, we will reach the capacity of the markets to absorb all the people food, animal feed, pharmaceuticals, industrial chemicals and other co-products that must also be manufactured from corn and profitably marketed to make it financially feasible to turn corn into ethanol.

    larry hagedon

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