As more ethanol plants come online in Nebraska, corn does not always go from the field or farmer’s grain bin to the grain elevator.
Instead, most ethanol plants originate some of their own corn, buying direct from corn growers. That can create challenges for grain elevators, which are accustomed to a certain amount of grain coming into their system. It can also offer opportunities.
Todd Gerdes, current president of the Nebraska Grain & Feed Association, says NGF takes a neutral view on ethanol. "We recognize that for some elevators it can be a challenge, but we also recognize that some elevators will find opportunity there and be positioned in a way to help ethanol plants."
Grain elevators already have the infrastructure in place to accept, dry, store and deliver large quantities of corn. "That can put them in position to assist ethanol plants with sourcing corn," says Kelly Brunkhorst, ag promotion coordinator with the Nebraska Corn Board.
"That means grain elevators will continue to fill a very important role for corn producers," Brunkhorst says. "Not only do they buy and help market corn to the feed sector or rail market in California, but they help keep ethanol plants running efficiently."
One company that views ethanol as an opportunity is Frenchman Valley Cooperative in Imperial. FVC, which traces its roots to 1912, has adapted to dozens of changes in the grain industry over the years. Ethanol is just the latest.
Dave Schneider, manager of the co-op’s grain division, says his company approached the owners of the Trenton Agri Products ethanol plant with the concept that FVC would be a great backstop for the 32,000 bushels of corn and sorghum TAP needs every day to run efficiently. TAP’s management agreed.
The last three years has proven that partnership, Schneider says. "It is quite difficult for an ethanol plant, which uses a very defined quantity of corn every day, to go out and purchase it all from corn producers on a regular basis without some sort of commercial supply," he says.
"You have a snow storm on Friday, a Cornhusker game on Saturday or maybe wheat seeding or corn planting," he says. All take away from a corn grower’s time to deliver corn to an ethanol plant. "It’s no joke, it’s real. Those are times when ethanol plants would have problems sourcing grains."
Gerdes, who is the specialty grains and origination manager for Aurora Co-op, says the co-op works with a neighboring ethanol plant to deliver corn and is building a large grain storage facility near the existing ethanol plant and one that’s under construction.
"We know how much grain we need to deliver to the ethanol plant every day, every week and every month," Gerdes says. "That makes the logistics easier to predict and means we don’t have to worry quite as much about railroad performance because less grain is going on rail."
As FVC in Imperial wrapped up its fourth year of working with TAP, Schneider says the two have found that 30-40% of an ethanol plant’s needs can be procured from corn growers. The rest has to come from a commercial grain elevator that has the storage and flexibility to meet the ethanol plant’s demands.
"We have ownership of grain and can turn around and provide that to an ethanol plant in 100,000 or 300,000 bushel lots instead of 10,000-20,000 bushels from producers," Schneider says. "We arrange for transportation, pay those firms, pay producers we purchase corn from and allow the ethanol plant to focus more on ethanol."