Argus Media

April 26, 2017

Danish biotechnology firm Novozymes said it expects a slight rise in US ethanol output in 2017, after an increase in production in the first quarter of the year. But the company says US demand is down and inventories in the country are rising.

The firm said it had boosted sales of its enzymes to US bioethanol producers in the first three months of this year, helping grow sales of its bioenergy segment to 681mn kroner ($100mn) up by 9pc compared with January to March 2016. Novozymes said this was the result of estimated US ethanol output rising by 4pc in the first three months of this year, set against the first quarter a year ago. The company said it expects US ethanol output this year to be "on a par or slightly up on 2016." It also expects second generation ethanol output to increase by an unspecified amount.

The increase in its bioenergy enzymes sales reverses a decline in 2016 when Novozymes said US ethanol producers were looking to cut costs, as profits remained thin. The company has been aided in the last year by the launch of new products and in part by the decline in the oil price, which supported gasoline demand in the US, into which ethanol is blended.

But the firm said today US ethanol consumption had declined slightly in the first quarter and inventories were building. "Margins came down in the first quarter," said head of bioenergy Tina Sejersgard Fano.

The EIA said inventories are around 23mn bl, up by 1mn bl on the year, with its most recent production data giving output of 993,000 b/d, up by around 6pc on the year. That inventory build "could lead to a reduction in production," in the rest of the year said Holk Nielsen.

In Europe Novozymes owns a 10pc stake in the 40,000 tonnes/yr Crescentino cellulosic ethanol plant in northern Italy, operated by Beta Renewables. The unit was first started up in December 2012 but it ran into familiar problems associated with plants aiming to create ethanol from straw and other biomass. Novozymes said the plant is still not at capacity.

The company also supplies enzymes to cellulosic ethanol plants in the US, Brazil and China, all of which have faced similar issues. But Sejersgard Fano said US cellulosic plants were having "more and more stable production," despite being only a small part of overall US ethanol output.

But the company has successfully launched a new corn innoculant Acceleron B-300 SAT, partnering biotechnology firm Monsanto, aiming to boost US crop yields. The microbe coats seeds of corn hybrids sold by Monsanto, with Novozymes estimating the innoculant's use will reach 4.5mn to 9mn acres of planted US corn in 2017. Monsanto's sells its seeds to around 45mn acres in the US, around half of all US corn acreage.

The firm increased its first quarter net profit to 772mn kroner, up from 745mn on the year.

Read the original story: Novozymes Eyes Increase in US Ethanol Output

Ethanol Producer Magazine

April 25, 2017

By Ann Bailey

The benefits in feeding distillers grains are well known—it’s an economical, nutritious, palatable addition to livestock and poultry rations. Less well known are its environmental benefits that range from reducing methane emissions from cattle to minimizing phosphorus content in manure and the risk from runoff into waterways. These little-known benefits are something that University of Minnesota professor and animal nutritionist Gerald (Jerry) Shurson believes the ethanol industry should tout.

“We’re entering an era where we have to think about the environmental impact of feed ingredients,” Shurson says. One of the biggest challenges today is to sustainably produce enough nutritious, safe and affordable food for a growing population, while at the same time preserving natural resources and minimizing negative impacts on the environment. Food demand is projected to increase 70 percent between 2010 and 2050 and the growing middle class is expected to have 1.8 times more consumer buying power, allowing more people to be able to buy more milk, meat and eggs, he says. Meeting the goal of feeding the world sustainably will be multidimensional, requiring innovations in production techniques and systems that increase the efficiency and amount of food produced, while preserving finite natural resources, protecting ecosystems and biodiversity, and mitigating the effects of global climate change, Shurson says.

Estimates indicate about 14 percent of human-produced greenhouse gas (GHG) emissions globally come from the livestock sector, Shurson says. While 14 percent is not a huge contribution to the total, nonetheless, it  is significant and there are opportunities for the livestock industry to play a significant part in reducing greenhouse gases. Growing consumer concern about the effect the global livestock industry has on the environment and climate change is prompting integrated livestock and poultry producers and food production companies to begin emphasizing supply chain management to reduce their carbon footprints, Shurson says. “In other words, in addition to nutrition and economic value, they are also sourcing ingredients that have less negative impact on the environment.”  Feed ingredients are beginning to be classified by renewable and nonrenewable resource use, acidification and eutrophication potential, and contribution to GHG emissions, he says.

DDGS can play an important role. In 2015, the ethanol industry produced roughly 37 million metric tons of DDGS for export and domestic use. Historically, most of the corn coproduct was fed to dairy and beef cattle, but because ethanol and DDGS production has greatly increased during the past 15 years, the need to build the market has increased, both domestically and overseas. Inclusion rates for dairy and beef cattle have also risen and demand from other livestock sectors, such as swine, poultry and aquaculture, both domestically and overseas, has increased.

Methane, Phosphorus Benefits
One side effect of increasing the inclusion rate of DDGS in the diet of dairy cows is it increases the amount of corn oil consumed. Several studies have shown that raising dietary fat content reduces methane production, Shurson notes. That’s important because methane is a significant contributor to greenhouse gas emissions. “The reduction in methane production in cattle is a positive environmental story that makes DDGS even more attractive, beyond its economic and performance benefits.”

On top of reducing methane emission in cows, feeding distillers grains brings an important environmental benefit to poultry and swine operations. “One of the unique advantages of using DDGS in swine and poultry diets is that it contains a greater concentration of digestible phosphorus than all other grains and grain coproducts, which can dramatically reduce the amount of phosphorus excretion in manure,” Shurson says.

“Whatever is not digested and absorbed by the animal comes out in the manure, so there is a dramatic reduction in phosphorus excretion in manure when adding DDGS to these diets.”

The reduced phosphorus content in manure from pigs and poultry fed DDGS means that when manure is applied to soil, there is less phosphorus runoff into rivers, lakes and streams, Shurson says.

“Because we take corn and put it through a fermentation process with yeast in an ethanol plant, that process converts much of the indigestible phosphorus into a digestible form which is important to pigs and poultry.” Less risk of runoff into waterways Shurson says, minimizes the risk of eutrophication, which can lead to algae blooms and fish kill, if it’s severe enough.

Another environmental advantage of the high digestibility of phosphorus in DDGS is that animal nutritionists can reduce inorganic phosphorus supplementation, Shurson says. “Some experts have predicted that within the next 20 years, our natural phosphate reserves around the world will be close to being depleted, so there’s a big amount of interest, and even organizations, focused on phosphorus conservation.” Distillers dried grains plays a big role because it is not only high in phosphorus content, but the phosphorus is more digestible, reducing the pressure on inorganic reserves, he says. “That’s a good thing from a long-term environmental perspective.”

Besides having positive environmental benefits, reducing the amount of inorganic phosphates in the animals’ diets is cost effective, Shurson adds. “Inorganic phosphate sources are relatively expensive and phosphorus is the third most expensive nutritional component in animal feeds. Using more DDGS to replace inorganic phosphate supplements reduces diet cost when diets are formulated on a digestible phosphorus basis.”

On top of reducing the amount of methane in cattle and phosphorus in pigs, DDGS also have potential to mitigate the smell in commercial swine operations. Some studies have shown that the amount of hydrogen sulfide emitted from stored manure is reduced in pigs that are fed 30 percent DDGS diets compared with corn-soybean meal diets, Shurson says, which reduces odor in manure storage pits. Odor reduction is a significant advantage because as urban areas move closer to large confinement operations, complaints about the smell emitted from the manure storage pits increase, Shurson says.

Telling the Story
Historically, the focus of nutritionists and livestock producers has been on minimizing costs while optimizing animal performance. That will continue, Shurson says, but there are already signs that environmental concerns will add another level to purchasing decision. “What I’m suggesting is, we’re entering an era where we have to think about the environmental impact of feed ingredients, because global agriculture is projected to represent more than 50 percent of total agricultural economic value in the next 10 years,” he says. The growing middle class in China and other Asian countries, together with an increasing global population, will result in the production of more food animals than ever before, Shurson notes. Furthermore, driven by consumer desire, food companies and major livestock and poultry integrators are beginning to make claims that the food they produce is, among other things, environmentally friendly, he says. The business models of companies such as Walmart, Smithfield Foods and Pepsico are putting more emphasis on limiting environmental impacts in response to those concerns.

Because DDGS are a significant global feed ingredient, Shurson believes the ethanol industry has an important story to tell. “A lot of companies are talking about, and struggling with, how they can move toward a bioeconomy. The role of ethanol and its major coproduct, DDGS, contribute to a positive environmental story. I’ve begun introducing these positive environmental impact stories in many of my presentations at feed conferences in the U.S. and overseas.”

Measuring the Impact
Feeding food-producing animals diets that reduce the negative effect on the environment is important because it is something that can have an appreciable, measurable effect, says Jennifer Schmitt, program director and lead scientist at the NorthStar Initiative for Sustainable Enterprise, a program at the Institute on the Environment at the University of Minnesota. During the next year, Schmitt will be working on a project with Shurson and Pedro Urriola, University of Minnesota animal science research assistant professor, that will look at how four hog diets affect the life-cycle (cradle to grave) environmental impact of hog production. One of the diets will contain DDGS, another food waste, a third, phytase enzymes and a fourth, synthetic amino acids. Hogs were chosen for the project because their digestive systems can handle a wider variety of feeds than animals such as dairy and beef cattle.

“If we can show ways to improve the environmental impacts with pork, we can reduce the overall environmental burden of meat animals,” Schmitt says. “Meat consumption has large environmental impacts in the world, so if we want to address greenhouse gas emissions, water use, water quality, land use, etc., we must either decrease meat consumption in the world or have more sustainable meat production.” It is unlikely total world meat consumption will decrease because the middle class is expected to grow and they will be eating more, not less, meat, Schmitt says. That means that finding a more sustainable way to produce meat is important. Manure management is the No. 1 environmental “hot spot” or the largest contributor, to the greenhouse gases associated with hog production. Second is production of corn feed products, followed by in-home consumption, which includes food waste, she says. “If we can hit those big hot spots and make improvements, we can have environmental gains.”

Read the original story: Untold Story of DDGS’ Positive Environmental Impact

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