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In my previous column (CEREAL FOODS WORLD, November-December 2003), I discussed the current situation for coproducts from the corn wet-milling (CWM) industry, as well as the dry-milling ethanol industry. In this column, I will explore the opportunities and challenges faced by the CWM industry. As I previously indicated, in recent years the economics of this industry have shifted because of three major factors: 1) lower prices and flat growth for the primary product from corn wet milling, sweeteners; 2) low prices and stagnant demand for the largest volume coproduct, corn gluten feed (CGF); and 3) tremendous growth in ethanol production and its coproducts, distillers dry grain with solubles (DDGS) from corn dry-milling processing, which is adding to an already large volume of coproducts from the CWM industry. I also will discuss some of the opportunities provided by the combined development efforts of government, universities, industry, and trade groups (2).
To briefly recap, in 2002 CWM operations produced more than 11 billion pounds of coproducts, and the dry-milling industry added more than 5 billion pounds to these materials. The major coproduct from CWM is CGF ([asymptotically =]9 billion pounds), which is composed of fiber, starch, and proteins. Most CGF is currently utilized as a feed for animals. The other coproduct fractions, gluten and germ, have higher values because they contain high levels of protein and oil. The growth of these products is in proportion to the growth of CWM products, been accelerated by the growth of ethanol production. In my previous column, different streams were described as CGF, corn gluten meal (CGM) that has at least 60% protein, and corn germ that contains 50% oil. In dry milling for ethanol production, these fractions are not separated, instead they are combined with solubles, and the combined coproduct stream is called DDGS.
The CWM industry is facing the major challenge of adding value to CGF, its largest volume product, which now has competition from other materials, such as DDGS, which has a better nutritional value as feed. Lower prices, as well as defined international and domestic markets, are resulting in a much lower contribution to the corn cost and, thereby, reducing the margins of commodities such as high-fructose corn syrups, other sweeteners, and high-volume starch products, which...