Coproducts Revenue Rising

by Holly Jessen (Ethanol Producer Magazine) New benchmarking information points strongly toward a growing percentage of overall plant income streaming from ethanol’s ancillary outputs. Data from 65 participating facilities show revenue from coproducts averaged 27% of total plant revenue in Q1. -- New data shows ethanol coproducts represent increasingly higher percentages of plant revenue. In 2020 coproduct profitability went up notably, keeping the industry moving forward in extremely difficult times, and that trend has continued in 2021.

“The ongoing theme is coproducts’ contribution to the bottom line,” says Connie Lindstrom, senior biofuels analyst for Christianson Benchmarking LLC, a subscription-based service which aggregates ethanol industry data. In the past 12 months, it included data from 65 facilities operating in the U.S. and Canada.

While it’s too early to say definitively that ethanol producers should throw their focus onto coproduct diversification, it’s something to seriously consider.

The corn recapture percentage is another useful number to look at, especially considering increased corn prices. It’s the percentage of revenue ethanol producers are getting back in coproduct sales per every dollar spent on corn feedstock, she says.

Increased revenue from coproducts, especially when looking at the gap between leaders and laggards, reminds Lindstrom of when there were a number of ethanol plants extracting corn oil but not all the industry had installed the technology yet. That seems to be what’s happening here, she says, as more plants produce new types of specialized coproducts, their revenue from coproducts is going up. It could also be ethanol plants with higher corn oil yield coming out front in coproduct revenue, because corn oil prices have been high.

Currently, the benchmarking program doesn’t collect specific data on different coproducts but that’s going to change in the future, she says. As more ethanol plants diversify their coproduct mix and others consider adding on new technologies, producers have been asking for more details on the profitability of specific coproducts. Another area of interest is information on revenue from pharmaceutical grade alcohol, ethanol produced for export markets and more.

Although there are plans to start collecting data for the benchmarking program soon, it will be a while before Christianson can release it to their clients.

Green Plains Inc. is one of the companies Flodman mentioned as an example of an ethanol production company charging ahead to diversify its product streams. In January, Ospraie Management and Green Plains announced they had acquired majority interest in Fluid Quip Technologies and would deploy a number of the company’s technologies, including ultra-high protein, renewable corn oil and Clean Sugar Technology (CST), beginning this year.

Progress toward the company’s goal to install ultra-high protein extraction technology at all its ethanol plants has marched forward quickly, with multiple projects in Nebraska. In early July, Green Plains announced it broke ground on its third ultra-high protein instillation, Fluid Quip’s MSC system, at its Central City, Neb., facility. In addition, construction is ongoing at Green Plain’s Wood River, Neb., ethanol plant, with startup expected in the third quarter of 2021.

Green Plain’s first instillation of the technology was at its Shenandoah, Iowa, plant. Production of ultra-high protein started there in April 2020 and by February of this year the company announced it had achieved a sustainable protein concentration of 58 percent.

Green Plains has also made progress in diversification projects at its York facility, another of its ethanol plants in Nebraska. Two announcements were made in January. First, the company said it had completed an upgrade, adding a new distillation production unit to produce United States Pharmacopeia (USP) grade alcohol, with plans to upgrade again to Grain Neutral Spirits by adding additional distillation and processing capabilities so it can serve more high-value markets, including beverage alcohol. Next, the company said Fluid Quip would engineer and construct fully scalable commercial CST production at the York Innovation Center, co-located with the York ethanol biorefinery.

Another announcement relevant to the topic of diversification came in early June when ICM Inc. signed an agreement with Texas-based Visionary Fiber Technologies Inc. (VFT). ICM will serve as the exclusive distributor, engineering, procurement and construction contractor for VFT’s fiber reactor separation technology, for deployment within the ethanol industry.

The proprietary technology can be used to refine corn oil produced at ethanol plants, removing significantly more impurities so it can be sold to renewable diesel refineries for use as a feedstock without the need for pretreatment and without risk of catalyst damage. READ MORE