Gevo signs iDGs offtake with nation's largest feed producer

By Kris Bevill | January 11, 2012

Colorado-based butanol producer Gevo Inc. announced it has signed an offtake and marketing agreement with Minnesota-based national feed provider Land O’Lakes Purina Feed LLC for isobutanol coproducts, dried and modified wet distillers grains, produced at a former corn ethanol plant in Luverne, Minn. Last May, Gevo began retrofitting the facility acquired in 2010 to produce corn-based isobutanol. It expects to begin commercial-scale isobutanol production in the first half of this year, ramping up towards the plant’s full capacity of 18 MMgy in the second half of the year. When fully operational, Gevo’s Luverne plant is expected to produce between 60,000 and 70,000 tons of iDGs annually. The company is not releasing an estimated production amount for 2012.

“Corn is interesting as a feedstock because it has both protein and carbohydrates,” Gevo CEO Patrick Gruber said. “Producing protein and animal feed from agriculture is extremely important, and selling the protein for feed, and using the excess carbohydrate for chemicals and fuels makes great sense given the fact that almost all of the nutritional value of corn can be captured in the animal feed product.”

The term “distillers grains” has traditionally been used to refer to a product produced as a result of ethanol fermentation. To make the distinction between feed derived from butanol production and traditional distillers grains, Gevo has trademarked the acronym iDGs to refer to its isobutanol distillers grains. Aside from the terminology, however, Gevo executives say there is no difference between its product and distillers grains produced at ethanol plants. “The only thing we’re fermenting off is the starch, so all of the other pieces will be the same as traditional distillers grain,” Glenn Johnston, vice president of regulatory affairs at Gevo, said. The company employed the expertise of a toxicologist to evaluate the product and determined that it can be safely used as an animal feed, but Gevo has also filed a dossier with the U.S. Food and Drug Administration to review the product, Johnston said.

John Hany, director of direct ship merchandising and distillers grains marketing for Land O’Lakes Purina Feed, expressed enthusiasm over the potential for Gevo’s feed product. “When a partnership is developed between the technological expertise of Gevo and the research capabilities and customer networks of Land O’Lakes Purina Feed, it presents another opportunity to add value to grain farmers and livestock producers alike,” he said. “We are very excited about our future together and the potential gains that may be had by all involved.”

Brant DeMuth, Gevo’s executive vice president of strategy and corporate development, said the company is not disclosing a pricing strategy for its iDGs, but that it expects them to be competitive with traditional distillers grains, at least initially. “The objective of our relationship with Land O’Lakes is to enhance the value, and we anticipate being able to do that,” he said. By developing value-added products that promote animal growth and nutritional value, for example, Gevo’s iDGs would be able demand a premium price on the market, further offsetting the company’s net carbohydrate costs. Gevo declined to release specific details on feed enhancement plans, but Johnston said the company is exploring a model similar to that used by Cargill Inc. to create its premium feed products.