Building A New Future

The Andersons Ethanol facility

When driving through Albion, MI, in early spring, visitors will see the usual agricultural-based sights — corn fields ready for planting, floaters applying spring fertilizer, grain elevators gleaming in the sun. A more unusual sight is what’s alongside some of the grain elevators — a newly opened ethanol production facility, fermentation tanks and distillers churning out thousands of gallons of this corn-derived biofuel 24 hours per day.

Although this scene may be somewhat unique at the moment, industry insiders expect it to become much more commonplace in the near future. By most estimates, more than 100 ethanol production facilities are slated to open within the next year — a good majority working in conjunction with grain elevators. In fact, according to Neill McKinstray, vice president/general manager of the Ethanol Division for The Andersons, Inc., Maumee, OH, ethanol plants co-located with elevators could very well be one of the future paths the grain industry follows.

“By now, everyone’s aware of what the move to ethanol has done for corn acreage and commodity prices,” says McKinstray. “But it could also mean the end of the grain business as we knew it, affecting everything from supply to distribution to storage. We realized that if we wanted to prosper in this new ethanol world, The Andersons would have to turn this potential minus into a plus.”

The Production Equation

According to McKinstray, the origin of The Andersons’ investment in ethanol production dates back five or six years ago. At that time, the company noted the growing interest in ethanol/increased production plant openings taking place in many parts of the western Corn Belt. In the areas where this trend had taken hold, the percentage of corn being used to produce ethanol steadily grew. One of the top grain-handling companies in the country, The Andersons distributes more than 175 million bushels per year through 10,000 Midwest producer and elevator customers.

“We quickly realized that the ethanol movement would likely enter the eastern Corn Belt and have a serious impact on the way we run our grain business,” says McKinstray. “We were one of the first companies to realize the synergy that existed between grain elevators and ethanol plants.”

Calling upon its 60 years of experience with grain handling, the company decided that entering the ethanol production business directly was the surest way to keep the retailer ahead of the expected market changes. In 2005, says McKinstray, The Andersons’ Board of Directors agreed to build an ethanol production facility in Albion, next door to the company’s 25-year-old grain terminal.

Construction began in August 2005, and the new plant officially started producing ethanol one year later.

The Albion ethanol plant sits on 78 acres of Michigan land connected to the existing grain terminal. According to Gabe Corey, production manager, The Andersons Albion Ethanol LLC, the facility will make approximately 55 million gallons of ethanol per year. It features state-of-the-art control and security systems — not to mention approximately 100 miles worth of wiring, 7 miles of piping, and more than 700 control motors that run much of the automated equipment.

“From an operations standpoint, this volume of material means that lots of stuff can break down while we are running the plant,” says Corey. “But we still only have 40 employees on-site, and they do a great job of keeping everything in good working order.”

Keeping Supply Close By

Of course, one of the main challenges for any ethanol plant today is making certain it has enough feedstock to operate. Although USDA estimates predict U.S. growers will plant an additional 12 million acres of corn in 2006, there is already some nervousness among producers that this still won’t be enough to supply all the existing and soon-to-open ethanol plants located throughout the Midwest.

Anticipating this very scenario at work is one of the reasons The Andersons Albion facility is connected with a grain terminal, says Corey. “In the grain bins we have on-site, we have a storage capacity of 3 million bushels at any given moment,” he says. “Even if we have trouble getting corn from outside sources, we can always fall back on this grain to keep our operations running at full steam.”

Initially, he adds, the facility faced a challenge hiring operators that had ethanol experience. “But our management leadership and drive to learn the process overcame this short-term challenge,” says Corey. “Our biggest challenge now is continuing to look toward process and profitability improvements.”

More Training Planned

To address this issue, Corey says The Andersons has conducted extensive training and education at the ethanol operator level to promote further opportunities from within the group. In the future, he expects The Andersons to recruit potential ethanol workers from universities and hopes that there will be more scholarship efforts to students interested in job opportunities within the ethanol industry.

On the larger ethanol business stage, The Andersons is already in the midst of adding to its production division. One ethanol plant in Clymers, IN, should be open by mid-2007. Another located in Greenville, OH, is scheduled to start production in January 2008.

“We have a few other market sites we are looking at as possible places where we could construct ethanol plants,” says McKinstray. “If additional plants aren’t built, we believe we have a solid concept and strong competitive position. At The Andersons, we are not so much about building plants and producing ethanol as we are about running a successful business into the future. Our focus is on optimal production efficiency and commodity price risk management on a plant-by-plant basis.”

In today’s ethanol business, McKinstray thinks this “in it for the long haul” approach is the way to operate, particularly with The Andersons’ grain interests in mind. Although he expects ethanol to remain a “hot” business area for the next year or so, he predicts things will get “much more competitive” than what’s been witnessed thus far. He notes that the cost of building new ethanol production facilities is rapidly rising and finding new sources of corn feedstock will probably become more difficult as 2007 rolls on. This might lead to something of an industry shakeout or pushback by the end of the year.

“To achieve long-term success in this business, it is extremely important to have a solid production facility and team of people running it for you,” he says. “Grain is a commodity market, and sometimes very volatile. Unless you have a long range vision in place, I think it will be very hard — if not impossible — to expect to be a player in this field for very long. In this regard, The Andersons is here to stay.”

Leave a Reply

CropLife 100 Stories

BAICOR
CropLife 100BRANDT Acquires Utah Specialty Fertilizer Company
April 28, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty ag products, has acquired a majority interest in BAICOR, L.C. BAICOR, Read More
Crop InputsWinField US, Southern States Ink Crop Input Agreement
April 20, 2016
WinField US (WinField United Suppliers) and Southern States Cooperative have signed a letter of intent to enter into a supply agreement Read More
Wheat Growers
CropLife 100Wheat Growers Announces Organizational Changes
April 13, 2016
Wheat Growers, a grain and agronomy cooperative headquartered in Aberdeen, SD, has announced the impending retirement of a senior leadership Read More
Dave Dufault Simplot
CropLife 100J.R. Simplot Co. To Distribute Cool Terra Product To Improve Soil Health
April 7, 2016
Cool Planet has announced a new distribution agreement with the J.R. Simplot Co., one of the largest privately held agricultural companies in Read More
Trending Articles
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
HerbicidesHerbicide Resistance In Waterhemp Continues To Grow
April 22, 2016
Twenty-five years ago, waterhemp was virtually unknown to Illinois farmers. Today, the broadleaf weed blankets corn and soybean fields across Read More
Eric SfiligojBiotech Corn Drop More Economics Vs. Consumer Rejection
April 18, 2016
Since their introduction into the agricultural marketplace, biotech crops has steadily grown in acreage in the countries of the world Read More
Crop InputsBayer: 5 Reasons We Disagree With Maryland Neonic Ban
April 12, 2016
We’re disappointed that the Maryland legislature chose not to stand up for sound science and the rights of Maryland’s homeowners Read More
Corn
OpinionChallenging Global Economic Conditions Putting More Heat On U.S. Ag Retailers
April 7, 2016
There it is. That vague, slightly sickening feeling in the pit of my stomach. Things are getting weird out there. Read More
Latest News
Young Corn Closeup
FungicidesSummer Fungicides: Still A Difficult Sell
May 6, 2016
About a dozen years ago, Asian soybean rust (ASR) was working its way up to the U.S. from South America, where Read More
ManagementGlyphosate, GMOs, and Plantings
May 6, 2016
Editors Paul Schrimpf and Eric Sfiligoj look at the latest news surrounding the ongoing glyphosate debate, biotech crops, and how Read More
Young Corn Field
Crop NutritionEnhancing In-Season Nitrogen Use Efficiency Is In The D…
May 5, 2016
Spring is here and crops are in the ground. Do you have a plan for your nitrogen during the growing Read More
ID3 Air Induction Flat Spray Nozzle | Lechler
Nozzles2016 Nozzles And Tips Report: Waste Watchers
May 5, 2016
Every year in the spring, ag retailers and their grower-customers prepare for the coming crop season. This involves prepping crop Read More
Industry NewsHELM AGRO Adds New Marketing & Business Development…
May 4, 2016
HELM AGRO US, Inc. has announced the hiring of Troy Bettner as the company’s new Marketing & Business Development Leader. Bettner Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncont…
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Spray Drift
HerbicidesRoundup Ready Xtend: Silver Linings In Label Delays For…
May 4, 2016
Since 2014, Monsanto has trained more than 20,000 growers and retailers on all aspects of its new dicamba-tolerant system at Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Board Appoints New CEO
May 4, 2016
Syngenta announced today the appointment of J. Erik Fyrwald, currently President and CEO of the U.S. chemistry distribution company Univar Read More
Crop InputsIntrexon Establishes Crop Protection Enterprise
May 4, 2016
Intrexon Corp., a leader in synthetic biology, has announced the formation of Intrexon Crop Protection (ICP), a wholly-owned subsidiary dedicated to Read More
Patriot 4440 Sprayer close up
ManagementFlashing Back And Moving Forward On Spray Drift
May 3, 2016
The potential for pesticide drift remains an unavoidable feature of modern agriculture. Here, too, history repeats itself. “When Roundup debuted, Read More
Giant Ragweed
HerbicidesSurvey Provides Insights On Giant Ragweed In The Corn B…
May 2, 2016
A new survey published in the journal Weed Science offers insights into the distribution and management of giant ragweed, a Read More
Truck dumping dry fertilizer
FertilizerFertilizer Logistics Q&A: Southern States’ Joe Wlod…
May 2, 2016
Joe Wlodkoski, Director of Agronomy Procurement, Fertilizer, Southern States Cooperative, is a 40-plus year fertilizer industry veteran. He is quite Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
West Central Dome structure
FertilizerFertilizer Logistics 2016: All Clear, So Far
May 1, 2016
After a relatively hairy early start to the spring fertilizer movement season with flooding in Louisiana and St. Louis, things Read More
BAICOR
CropLife 100BRANDT Acquires Utah Specialty Fertilizer Company
April 28, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty ag products, has acquired a majority interest in BAICOR, L.C. BAICOR, Read More
Soybean field
Industry NewsVerdesian Life Sciences Adds Vice President Of Business…
April 28, 2016
Verdesian Life Sciences has announced the addition of Marc Treurniet to the plant health and nutrition company’s management team. Treurniet Read More
ManagementBiotech Crops Developments and Millennials
April 28, 2016
Editors Eric Sfiligoj and Paul Schrimpf talk about the latest activities in biotech crops and a major shift in the Read More
Industry NewsNachurs-Alpine, Pathway Biologic Extend Marketing Agree…
April 28, 2016
Nachurs-Alpine Solutions (Marion, OH) and Pathway Biologic (Plant City, FL) announce an extension to their exclusive marketing agreement specific to Read More