Ethanol is XX% of Corn Production

I always find it curious that ethanol use is quoted as being about 35% of corn production (about 5 billion bushels divided by 14 billion bushels plus or minus).  What always seems to be missed in the equation is the amount of dried distillers grain (DDG) that is produced as part of the ethanol process.  A recent article from The Grand Island Independent Newspaper on the economic impact of the ethanol industry in Nebraska provides additional evidence of the amount of ethanol production going into DDGs.

The article stated that the ethanol industry provided over $5 billion of economic value to Nebraska each year since 2012.  In 2014, Nebraska processed 657 million bushels of corn into 2 billion gallons of ethanol and about 18 billion pounds of DDGs.  Each 56 pound bushel of corn produced about 18 pounds of DDG which is primarily consumed by livestock as feed.

If corn was not processed into ethanol, then it would need to be used as feed for livestock and we know that 18 pounds of highly concentrated corn is already being consumed.  It is my unscientific guess that another 10 pounds or so of corn would be “pooped” out the back-end as being not digestible by animals.  Therefore, in my opinion, the actual amount of net corn being by the ethanol industry is closer to 17.5% of total corn production, not 35%.

I would welcome some of the experts viewpoints on this matter if I am totally wrong, but until then, this is my opinion.

Paul Neiffer, CPA