Hexad Farms, Parker, S.D., has started construction on a micro ethanol plant adjacent to its feedlot.
The plant will cost approximately $1 million to build and will produce approximately 2 million gallons of ethanol and 15,000 tons of distillers grains annually.
"Why are we doing this? It's economics," says Walt Bones, one of the co-owners of Hexad Farms. He and his brothers, a brother-in-law and three nephews grow corn, run a cow-calf herd, feed 1,500 head of cattle, operate an elevator and own shares in a 2,000 cow dairy.
"We're spending 15 to 20 cents a bushel to haul corn to ethanol plants and $50,000 to $70,000 a year now just on transporting wet modified distillers grains back to our feedlot and the dairy," Bones says.
By making ethanol on their own farm, they hope to improve the quality of the feed byproduct, too.
They have been frustrated by the inconsistent quality of modified wet distillers grains that they been getting from large ethanol plants. The product mix varies from plant to plant and sometimes from batch to batch.
"Sometimes we only are able to get wet distillers grains when a big ethanol plant's dryer breaks down," Bones say.
Their partner in the project - Summit Green Energy - will market the ethanol and manage the plant. It is also building the facility, which covers five acres.
Why bother trying to add more value to corn that's been worth as much as $7 per bushel recently?
"Even though corn prices are high now, I don't think [profit] margins have changed much," Bones says. "We don't think we can relax and say we don't need to keep trying to add value."
Summit Green Energy, a new startup company located in Sioux Falls, S.D., is building the plant, called Genesis Ethanol 1. It will manage the facility, market the ethanol and own part of the plant.
Mark Boekelheide, a partner in Summit Green Energy, Sioux Falls, S.D., says he thinks there is a good niche for micro-ethanol plants.
In addition to savings on corn and byproduct trucking costs, a micro-ethanol plant will cost 40%-50% per gallon of capacity to build than a large plant and will use proportionally less water and fuel. It also will be highly automated and thus require less labor to operate than a large plant.
The concept isn't brand new. But Genesis Ethanol 1 is the first micro ethanol plant to be built in South Dakota since the modern ethanol industry took off.
Summit Green Energy hopes prove its concept at Hexad Farms and partner with other farmers and livestock producers to build more micro-ethanol plants.
"We anticipate this will be a model we can replicate many times," Boekelheide says.
The Hexad Farms plant should be operating sometime this fall.
For more information contact:
Walt Bones, Hexad Farms -- 605-940-8371 or firstname.lastname@example.org.
Mark Boekelheide, Summit Green Energy, LLC-- 605 361-9566 Extension 5013 or email@example.com.
Jud Pins, Summit Green Energy, LLC-- 605-361-9566 Extension 5014.