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The margin on ethanol sales has dwindled to less than 30 cents per gallon as prices have stabilized around $2.25 per gallon and corn prices have shot up from $1.80 to over $4.00 per bushel. Ethanol manufacturers are looking for new ways to increase profit margins. The good old days are gone.

Comparison	The Good Old Days	McCrabb System
Ethanol Prices	$3.00/gallon	$2.25/gallon
Corn Costs	$2.20/bushel	$4.00/bushel
Margins	$1.25.gallon	$ .30/gallon
Distillers Grain
Revenues	$100/Ton	$2.20/Ton
Associated Costs	$100/Ton	$ 0.00
DG Profit	$ 0.00	$ .70/gallon

Distillers Grain (DG), long a source of animal feed, is no longer the ugly duckling of corn ethanol plants, hidden away in overflowing storage tanks and decaying mountains of dried grain. The ethanol industry has been searching for a solution to this problem for many years. “The cost of drying the distillers grain and disposing of the waste virtually offsets DG sales revenues. “DG has been a breakeven proposition in most ethanol plants,” claims Jim Plautz, President of Ethanol Productions. “For every pound of DG sold at $100 a ton, another pound is thrown away. EPA regulations make this an expensive and cumbersome process.”

James McCrabb’s low temperature distillation process, together with his re-engineered plant design, has gone a long way towards solving this problem. There is no waste. Over 99% of the distillers grain is recovered during the distillation process rather than 60% in old-style ethanol plants. “McCrabb’s new process changes the economics of the ethanol industry,” Plautz claims. “DG sales will account for more than 20% of revenues without the high cost of incurred to dry the DG and dispose of the six to seven pounds of waste now incurred from every bushel of corn. This is a huge problem when you consider that a 100 million gallon ethanol plant uses over 38 million bushels of corn and generates 134,000 tons of waste.

This is only the tip of the iceberg. The 60% of the DG that existing ethanol plants recover from the distillation process cannot always be sold because wet distillers grain (WDG) has a shelf life of only 5-7 days and dried distillers grain (DDG) is difficult to transport. This creates even more waste. Some rail companies refuse to ship DG in powder form because of flowability problems incurred when loading and unloading the rail cars. Research institutions and Universities have long searched for a way to increase shelf life and convert DG into pellet form that is easier to ship. Various approaches are used including adding solubles such as corn or bean meal, molasses or other products to improve the cohesiveness of the dry DG powder.

McCrabb’s new process addresses this problem through improved temperature and moisture control during cooking and distillation. “We don’t need dryers or centrifuges in our process,” Plautz points out. “We keep the moisture and produce DG in pellet or cube form depending upon the extruder used. This means we can ship our product anywhere in the world – wherever we can get the best deal. We will sell 100% of the DG we produce at more than twice the price of DG produced in today’s ethanol plants. The value of animal feed depends largely on its protein content and the DG produced in McCrabb’s low-temperature system has twice the protein and nutrients. “It compares to soybean meal, which currently sells for about $220 per ton.

In summary, the new McCrabb’ system cost less to build and makes DG a profit center rather than a cost center, by capturing 100% of the DG, eliminating waste and creating a more valuable product that can be shipped anywhere in the world. DG also becomes a buffer against the impact of rising corn costs. As the cost of corn rises, so does the value of the animal feed. Plautz estimates that 40% of increased corn costs is absorbed by higher DG prices and revenues for ethanol plants using the new system. It’s a win-win situation for the ethanol industry.

Contact Jim Plautz, jim.Plautz@verizon.net or 813-968-6867, for more information.

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See other File (ethanol – DG sources) for supporting materials.