Iowa survey shows shift in corn sales, ethanol and DDGS movement

By Ryan C. Christiansen | March 05, 2009
The direct sale of Iowa corn from growers to processors, including ethanol plants, has been increasing steadily, while the sale of corn to grain elevators has been declining, according to a study conducted by researchers from Iowa State University and the University of Tennessee.

Meanwhile, grain elevators are shipping more corn to ethanol plants, and they are receiving and shipping more distillers dried grains (DDGs). The effects of the ethanol industry on the movements of Iowa corn were studied by Chad Hart, an agronomist at Iowa State University, and Tun-Hsiang Yu, an agronomist at the University of Tennessee. They reported their findings in a paper titled "Impact of Biofuel Industry Expansion on Grain Utilization and Distribution: Preliminary Results of Iowa Grain and Biofuel Survey." The researchers surveyed nearly 5,000 farmers and grain handlers over several months during the 2006-'07 marketing year, and the data gathered was compared with surveys from previous years.

During 2006-'07 according to the survey, Iowa farmers produced 2.05 billion bushels of corn, 62 percent of which was sold to private and cooperative grain elevators. Twenty-seven percent was sold to ethanol plants and other corn processors, which purchased 92 percent of their corn from Iowa sources, all of which was delivered to the processors by truck. In contrast, the 1999-2000 marketing year survey showed that 66 percent of Iowa corn went to elevators, while 13 percent was sold to corn processors, including ethanol plants. The percentage of corn sold to river terminals and farm feeding operations declined.

Meanwhile, most of the ethanol and DDGs produced by ethanol plants were shipped to out-of-state destinations. Only 7 percent of the ethanol produced in Iowa was used in Iowa.

Approximately 23 percent of Iowa ethanol was shipped to California, Arizona, Nevada and Utah, while nearly 10 percent was shipped to states in the northeastern U.S. More than 7 percent was shipped to Texas, Oklahoma and New Mexico. The largest share of ethanol was shipped to states not listed on the survey but was likely shipped to states surrounding Iowa, as well, the researchers said. Less than 2 percent of Iowa's ethanol was exported outside the U.S.

The majority of Iowa corn processors (85 percent) use dry-grind processes to produce ethanol, and 85 percent don't use fractionation, the survey found. However, nearly 23 percent planned to add the process within five years. Only 8 percent extracted corn oil, but half said they expect to implement the practice by 2012. Approximately 38 percent of processors were not considering adding cellulosic ethanol capabilities by 2012, while 62 percent were undecided. Approximately 38 percent indicated their facilities' plans to expand their operations by 2012, 23 percent did not plan to expand, and 38 percent were undecided.