Ethanol powers expansion in industrial use of grains

by Meyer Sosland
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World industrial use of grains, driven by global expansion of ethanol production, was forecast to increase 23% in the 2007-08 crop year by the International Grains Council (IGC). The Council estimated likely industrial use of all grains in the current crop season at 229 million tonnes, compared with 186.5 million in 2006-07.

The increase of 42.5 million tonnes in industrial grain use projected for this year compares with the gain of 22.7 million in the prior year and 15 million in 2005-06.

At 229 million tonnes, expected industrial use of grains in 2007-08 showed a gain of 68% over the past five years that saw the emergence of ethanol production as a massive new influence.

"Growth in industrial use far exceeds any other segment of grains demand," the IGC said, "with food use rising by less than 1% per year and animal feed use declining slightly in recent years."

According to the IGC, global use of grains in making ethanol will soar to 106.8 million tonnes in 2007-08, up 35.6 million tonnes, or 50%, from 71.2 million in 2006-07. From five years ago, in 2003-04, when world grain use to make ethanol totaled 36.8 million tonnes, the current projection registered a cumulative gain of 190%.

Of the 106.8 million tonnes of grains expected to be used in making ethanol in 2007-08, the IGC estimated that maize (corn) will account for 100.2 million, or 94%.

Maize was also the leader by far in the overall industrial use of cereal grains, accounting for 177.7 million tonnes, or 78%, of the aggregate of 229 million tonnes used industrially. Barley ranked second in industrial use of grain, projected to total 85 million tonnes in 2007-08, against 80.2 million in the prior marketing year. Wheat industrial use in 2007-08 was forecast at 18 million tonnes, against 15.8 million in 2006-07.

Industrial use of other grains included sorghum, 2.6 million tonnes; rye, 1.8 million; oats, 200,000; and unspecified, 1.4 million.

Compared with use five years earlier, in 2003-04, the projected totals for 2007-08 were up 87% for maize and 48% for wheat.

The current year will also be notable, the IGC said, because it will be the first in which use of grains to make ethanol outstripped the quantity processed into starch. Starch use in 2007-08 was forecast at 85 million tonnes, against 80.2 million in the preceding year and 75.3 million in 2005-06. As compared with five years earlier, current use of grains for making starch was up 26%.

Brewing represents the third major segment of industrial use of grains. This outlet accounted for 32.2 million tonnes in 2007-08, against 31.5 million in the previous crop year and 27.8 million five years earlier, in 2003-04. The five-year rise of use in brewing was 16%.

In discussing the rapid growth in use of grains in making ethanol, the IGC said much of the expansion was due to developments in the United States (U.S.). In 2006, the U.S. became the world’s leading ethanol producer, turning out 20 billion liters (5.2 billion gallons), an increase of nearly 25% from the year before, and overtaking Brazil, which produced an estimated 17 billion liters.

The Council said 15 ethanol plants commenced operations in the U.S. in 2006, taking the total number to 120. As of June 2007, another 85 plants were under construction or being expanded.

"Not all the additional plants will be completed during the 2007-08 marketing year," the Council said, "but once construction is finished, they will more than double U.S. ethanol production capacity, to almost 50 billion liters."

Pointing out that the European Union’s (E.U.) output of ethanol was much smaller than in the U.S., but "is growing very quickly," the IGC said E.U. output of ethanol in 2006 totaled 1.6 billion liters. That was up 71% from 2005. Current annual E.U. capacity was estimated at 2.8 billion liters, and new capacity was being constructed that would raise output by 3.7 billion liters. Thus, the Council forecast that E.U. grain use to make ethanol would increase by 23% to 3.2 million tonnes in 2007-08. "With further capacity expansion in the pipeline, grain use could double over the next two to three years," the IGC said.

In contrast with the U.S., where most ethanol is produced from maize, the Council noted that European manufacturers use a wider range of materials. It estimated that half of E.U. ethanol came from cereal grains, mainly wheat, maize, barley and rye, while the rest was made from sugar beet and wine alcohol.

The Council said China was the second-largest producer of grain-based ethanol, projected to use 9.3 million tonnes for making fuel, up 15% from the prior year. It noted that the Chinese government has said it will not approve further projects that utilize foodstuffs to make ethanol and that existing plants will gradually be converted to using materials like cassava, sweet potato and cellulose as feedstock.

The Council said about 1 million tonnes of maize and 500,000 tonnes of wheat were used to produce ethanol in Canada in 2006. Two new plants were being built in Canada, one using 300,000 tonnes of wheat a year and the other using the same amount of maize.

Commenting on the search for alternative feedstocks to grain, the Council said:

"Soaring use of grains for ethanol at a time of historically low world grain stocks and rising prices is stimulating research into the development of ethanol production from alternative feedstocks, particularly plant cellulose.

"While some commercially-sized plants using cellulose material are in the planning/construction stage (including two in the E.U.), the technology is still in its infancy and it may be five to 10 years before large-scale production of ethanol from cellulose is economically viable."