Q&A: Upstart Ethanol CEO Tells Why He's Upbeat
My grandfather farmed the same acres as my brothers and got 40 bushels an acre. My father got 80 bushels an acre. My brothers produce 160 bushels an acre. We've experienced firsthand the biggest challenge with corn production ... that we've overproduced.
Endres also addressed the "feed versus fuel" controversy over corn use and the concerns that have been raised by the livestock and food processing industries over their rising grain costs. He believes that the livestock industry will switch from using corn as feed to using "dried distillers grain" (DDG), a cheaper coproduct left over after the starch has been removed from the corn for ethanol processing. Currently, some cattle farmers add a small percentage of DDG to feed but consider it too rich to use in high quantities. Endres says, however, that VeraSun produces a low-fat DDG that can replace corn (and his company will convert the oil removed from the DDG into biodiesel fuel—thus squeezing three products out of one bushel of corn):
There's a transition underway. It's going to take some time until they can perfect that process. But for many, many years, livestock producers were feeding low-cost corn for protein, frankly, because it was undervalued because we were overproducing corn. And they got hooked on feeding corn.
We notice in the local market that livestock and corn producers have made the transition, and they're very happy. Distillers grain has become highly sought after and has moved up in value.
What would the development of "cellulosic" ethanol, from cheaper feedstocks like agricultural waste and fast-growing, low-maintenance grasses, do to the corn ethanol industry?
Cellulosic ethanol will be developed over the next five years, and I believe it will contribute to [the president's] goal. But we have a large potential to increase corn-based ethanol. ... Many people are assuming that because the price of corn has moved up, we have maxed out on our ability to produce ethanol from corn. And that's just not the case. The American farmer will respond and considerably increase that level.
But cellulosic is very exciting. I'm convinced it will develop, and I believe the opportunity will fit best with the current corn-based model, where you simply add to these facilities a cellulosic expansion and use corn stover [husks and waste], wheat straw, and other grasses in the same facility. ... I think really a nice synergy will come out of it. ... We have a technical group reviewing the technology, and at some point in time, when it becomes commercially viable to invest in a small-scale demonstration or full scale, we'll make that investment.
Can you sum up the impact of the ethanol business on the Midwest?
It has changed our landscape. For many years, we've been exporting our corn and exporting our young people. Ethanol is not only new demand for corn but new jobs for the families that live here. With cellulosic, you'll extend that throughout the country.
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