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

CropLife 100Wilbur-Ellis To Relocate Agribusiness Division To Denver
July 16, 2014
The move Eastward will allow Wilbur-Ellis’ Agribusiness Division to be more accessible to relevant geographies and is expected to enhance communication and collaboration among the division’s nearly 3,000 employees. Read More
CropLife 100Map: Pinnacle Agriculture Holdings Acquisitions In 2014
May 29, 2014
Pinnacle Agriculture Holdings continues to expand its agricultural retail distribution business through these key acquisitions in 2014. Read More
CropLife 100CHS To Acquire Illinois River Energy Ethanol Plant
May 1, 2014
CHS has signed an agreement with Sinav Ltd. to acquire 100% of the company's stock, which includes Illinois River Energy, a 133-million-gallon-per-year ethanol plant at Rochelle, IL. Read More
CropLife 100Wheat Growers Opens New Agronomy Center
April 15, 2014
The new 10,400-square-foot center in Frederick, SD; features a 60,000-gallon liquid fertilizer plant and a state-of-the-industry seed treating system. Read More

Trending Articles

Green Valley Ag facility
Retail FacilitiesGreen Valley Ag Adopts A.J. Sackett’s Precision Fertilizer Blending® Technology At New Facility
July 8, 2014
Sackett's Precision Fertilizer Blending® Technology is making huge strides around the world. Green Valley Ag adopts the technology at its new facility to support its advancing agronomic needs. Read More
Retail FacilitiesWaconia Manufacturing Builds Facility Designed For Speed, Efficiency
July 7, 2014
To make its new hub facility more efficient, Cooperative Elevator enlisted the aid of Waconia Manufacturing. Read More
EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More

Latest News

StewardshipMonsanto Joins Panel Of Innovators To Advance Research …
July 30, 2014
Monsanto Co. and The Climate Corp., its division, recently joined a roundtable of experts at the White House to share ideas and research approaches to help the world’s farmers manage and adapt to the impact of climate change on the global food supply. Read More
Crop InputsSoybean Checkoff Produces Big ROI
July 30, 2014
Under the soy checkoff program, all U.S. soybean farmers contribute a small percentage of their gross soybean sales for research and marketing projects that maximize their profit potential. Read More
CropLife 100Learfield Sports, CHS Agree To Football-Centric, Colleg…
July 30, 2014
CHS Inc. will embark on a highly integrated collegiate sports sponsorship platform with 24 Division I universities in 19 states designed to reach the farmer-owned cooperative's rural owners and customers. Read More
LegislationUSDA Implements Key Farm Bill Crop Insurance Provision
July 30, 2014
The new Supplemental Coverage Option, available through the federal crop insurance program and set to begin with the 2015 crop year, is designed to help protect producers from yield and market volatility. Read More
CropLife 100Wilbur-Ellis Forms New Organizational Structure For Its…
July 30, 2014
The new structure will provide more responsive internal support and will allow regional vice presidents and area managers to spend more time with customers, on talent development and on operational excellence across branches. Read More
Palmer pigweed in cotton
HerbicidesNew Training Modules On Herbicide Resistance Now Availa…
July 30, 2014
The Weed Science Society of America has announced the availability of three new education modules on herbicide resistance in weeds. Read More
HerbicidesWillowood To Market Glufosinate
July 28, 2014
Willowood USA recently announced that Federal EPA has approved its technical registration for glufosinate. Read More
InsecticidesHow To Scout For Corn Earworms In Corn
July 28, 2014
In her weekly report, University of Missouri Agronomy Specialist Jill Scheidt discusses what to look for when scouting for corn earworm. Read More
Crop InputsDuPont Pioneer, Weyerhaeuser Enter Technology License A…
July 28, 2014
The agreement brings together agricultural and forestry know-how to sustainably improve crop productivity for corn growers around the world. Read More
EquipmentAGCO Launches Global iPad App
July 28, 2014
The free AGCO Global iPad App can be downloaded from the Apple iTunes Store and features the full family of RoGator self-propelled sprayers and TerraGator high-floatation spreaders. Read More
Eric SfiligojYuma Centennial Ag Supply Earns 2014 National Environme…
July 28, 2014
Colorado-based ag retailer receives top trophy in 24th annual DuPont Crop Protection/CropLife ceremony. Read More
CropLife 100Pinnacle Forms Alliance With Wildlife Managment, Seed O…
July 25, 2014
The strategic alliance will provide Tecomate with key wildlife products, processing facilities, distribution centers and sales through Pinnacle’s ever-growing retail network. Read More
ManagementFranken Presses White House On RFS Support
July 25, 2014
Al Franken and a group of Senate democrats recently met with senior White House official John Podesta to urge the administration to change its position on an EPA proposal. Read More
ManagementASA, FarmLink To Launch ‘Operation Benchmark̵…
July 25, 2014
The American Soybean Association (ASA) and FarmLink are teaming up to help farmers close the $11 billion gap between what they harvested in 2013 and what they could harvest annually. Read More
StewardshipNorthey: Farmers Commit $1.4 Million to Try New Water Q…
July 25, 2014
The practices that are eligible for funding include cover crops, no-till or strip till and using a nitrification inhibitor when applying fall fertilizer. Read More
Precision AgFarmers Learn How Changing World Will Impact Iowa
July 24, 2014
Technology and understanding global consumer demand for Iowa farm products brought hundreds of farmers and agribusiness leaders to Ames recently for the annual Iowa Farm Bureau Federation Economic Summit. Read More
HerbicidesPurdue: Late Season Weeds May Require Manual Removal
July 24, 2014
Hand-rouging and pulling late season weeds by hand may be the best way to remove them, more so than using a herbicide, a Purdue Extension weed scientist says. Read More
Soybean Field
InsecticidesTransform WG, Closer SC Insecticides Receive R&D 10…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More