Wet Corn Milling

SIC 2046

Companies in this industry

Industry report:

This industry comprises establishments primarily engaged in milling corn or sorghum grain (milo) by the wet process, and producing starch, syrup, oil, sugar, and by-products, such as gluten feed and meal. Also included in this industry are establishments primarily engaged in manufacturing starch from other vegetable sources, such as potatoes and wheat. Establishments primarily engaged in manufacturing table syrups from corn syrup and other ingredients and those manufacturing starch base dessert powders are classified in SIC 2099: Food Preparations, Not Elsewhere Classified.

The wet corn milling industry, also referred to as corn refining, processes roughly 20 percent of the U.S. corn crop. The milling process separates corn into its four basic components: starch, germ, fiber, and protein. Fiber and protein are made into animal feedstuffs; germ is refined further into corn oil; and starch can be further refined to create a wide variety of sweeteners, bioproducts, and ethanol.

According to the Corn Refiners Association, 27 corn refining plants in 12 states produced 1.4 billion bushels of corn grind in 2008. Products made from the corn had a value added by manufacture total of $6.6 billion. Most of the refined corn went into 23.1 billion pounds of sweeteners (dry weight). Corn was also used to produce 6.6 billion pounds of starches and 1.2 billion gallons of ethanol. All other products together accounted for 26.1 billion pounds.

Use of the corn kernel differs by product. Corn starch is used in a variety of industries, including food products, paper, adhesives, textiles, and pharmaceuticals. Starch can also be converted to ethanol. Wet corn millers advocated using ethanol as part of an overall national energy policy. Almost all growth in the corn industry is attributable to ethanol production, which expanded significantly during the 2000s. In 2000, of 1.938 billion bushels of corn, 628 million bushels (32 percent) went to the production of ethanol. By 2009, of the 5.452 billion bushels of corn for food and industrial uses, an estimated 4.2 billion bushels (77 percent) went to the production of ethanol. That is, in 2000, non-ethanol corn uses (e.g., high fructose corn syrup, glucose and dextrose, starch, beverage alcohol, and cereal grains) totaled 1.31 billion bushels; in 2009, non-ethanol milled corn use totaled 1.252 billion bushels. In other words, while ethanol grew rapidly during the 2000s, other categories declined.

In the late 2000s, the influx of supply led to a glut on the market, and suppliers suffered from weak prices and low production values. Some ethanol producers filed for bankruptcy. That year, the United States produced nine billion gallons of biofuels, up from 6.5 billion gallons in 2007, almost all from corn. By 2009, prices had stabilized, and most ethanol firms were operating in the black. In that year, Valero, the nation's second largest oil refiner, stepped into the ethanol business to become the industry's third largest ethanol operator.

In 2010, Iowa had the largest production capacity (26 percent of the nation's total), at 3.537 billion gallons per year, followed distantly by Nebraska (1.719 million gallons), Illinois (1.226 million gallons), Minnesota (1.095 million gallons), and South Dakota (1.016 million gallons). Questions remained about how helpful biofuels were in terms of reduction of fossil fuels and improvement of energy security. Proponents of ethanol argue that it is a cleaner-burning additive than traditional petroleum products, and it leaves less of a carbon footprint on the world's environment. Others, however, believe that using corn ethanol is no better than petroleum--and may even be worse--when total greenhouse gas emissions are considered. Much research and debate regarding the use of corn ethanol continued as the first decade of the twenty-first century neared a close. Proponents received a boost in September 2010 when the U.S. Department of Agriculture's Office of Energy Policy and New Uses released a report that claimed that ethanol is a net energy saver and that its production efficiency continues to improve. According to the report, every British thermal unit (BTU) of fossil-fuel energy used to make ethanol results in 2.3 BTUs of energy being produced.

Corn sweeteners, also produced from starch, include corn syrup, dextrose, and high fructose corn syrup (HFCS). In 2009, an estimated 465 million bushels of corn were used to make HFCS, which, since 1980, has been the sweetener of choice for the major U.S. soft drink manufacturers. Another 230 million bushels were used to produce glucose and dextrose. In 2009, the U.S. per capita consumption of caloric sweeteners was 137.1 pounds. Of this total, 53.2 pounds (38.3 percent) was HFCS, 13.4 pounds (9.8 percent) was glucose, and 2.8 pounds (twp percent) was dextrose. Refined sugar accounted for over 48.4 percent of sweeteners; honey and other edible sweeteners accounted for about one percent. In the late 2000s, the corn milling industry was working hard to reverse the misconception that HFCS was less healthy and "less natural" than regular sugar. According to the Corn Refiners Association, "high fructose corn syrup is made from corn, a natural grain product, and contains no artificial or synthetic ingredients or color additives." In addition, HFCS has the same calories per gram as table sugar. In 2008, the organization launched a national multimedia campaign to "dispel myths and correct inaccuracies" regarding HFCS.

Germ, the portion of the kernel from which a seed would sprout, contains oils used to make margarine, mayonnaise, salad dressings, and shortening. Other portions of the corn kernel are made up of protein and are used to produce corn gluten feed and corn gluten meal for animals and poultry.

Such multibillion dollar agribusiness concerns as Archer Daniels Midland Co. (ADM) of Decatur, Illinois; Cargill, Inc. of Wayzata, Minnesota; Tate & Lyle Americas (formerly A.E. Staley), of Decatur, Illinois; and Corn Products International, headquartered in Westchester, Illinois; were among the leading producers in the industry. ADM, which operated five wet corn milling facilities with its 29,300 employees, produces syrups, sweeteners, citric and lactic acids, and ethanol, among other items. Its overall 2009 sales surpassed $61.62 billion. Cargill Inc., the second largest privately owned company in the United States and the leading grain producer, had 159,000 employees and 2009 sales of more than $116.6 billion from diversified operations. Tate & Lyle, headquartered in the United Kingdom but with significant investments in the United States, focused on high fructose corn syrup, the sweetener used by virtually all soft-drink manufacturers. Offering more than 350 food and industrial starch products, the company was one of the largest corn refiners in the United States and posted sales of $5.28 billion in fiscal 2010. Corn Products International, the worldwide leader in production of dextrose and a leading regional manufacturer of starch, high fructose corn syrup, and glucose, posted sales of $3.67 billion for 2009 with nearly 8,100 employees.

With a national payroll of more than $3.3 billion, the corn refining industry employs more than 65,000 people, nearly 17 percent of whom are employed in Illinois. More than 40,000 farmers sell crops to corn wet millers, and more than 25 percent of them farm in Indiana.

Several developments during the first decade of the twenty-first century promised further growth for the industry. In 2002, researchers at the Agricultural Research Service Conversion Science and Engineering Research Unit of the U.S. Department of Agriculture applied for a patent for a new corn refining method. By using protease inhibitors to break down starch and protein, refiners are able to reduce the time it takes to soak corn kernels in sulfur dioxide from 24 hours to just six hours.

Other positive developments included a provision of the Energy Policy Act of 2005, effective until the end of 2010, that made fueling stations eligible to claim a 30 percent credit for the cost of installing clean fuel vehicle refueling equipment (e.g., E85 ethanol pumping stations). Under the provision, a clean fuel is any fuel that consists of at least 85 percent ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen, and any mixture of diesel fuel and biodiesel containing at least 20 percent biodiesel. In 2009, the American Recovery and Reinvestment Act of 2009 extended many tax incentives originally introduced in the Energy Policy Act of 2005. Previously, in 2005 and 2006, a feud over a Mexican tax on beverages containing HFCS was ruled a violation of Mexico's commitments to the World Trade Organization. The tax had resulted in more than $3 billion of lost HFCS exports and U.S.-owned HFCS sales in Mexico since 1997. Another positive development occurred in August 2006 when the U.S. Environmental Protection Agency released the first ever energy efficiency ratings for corn refineries (and cement plants), enabling the industry to cut energy usage, save money, and prevent greenhouse gases.

In 2009, MOR Technology LLC of Metropolis, Illinois, developed a new method of corn separation and fractionation that was more effective at separating the starch materials, bran dusts, and germs. These raw materials could then be used in the ethanol production process. Brad Ulrich of MOR told Industrial Bioprocessing in May 2009, "This unique fractionation process requires [less] water when compared to the conventional processes, and carbon dioxide released during the ethanol production process is converted into liquid-like semisolid solvent, which can be used in extracting food grade oil from germ. This increases the value of the corn and reduces the cost and at the same time reduces the impact of carbon foot print in the environment."

Finally, in 2009, proponents of ethanol use benefited from President Barack Obama's support of the industry as he directed more economic stimulus money and loan guarantees for biofuels research. He also pushed for the production of more ethanol-burning cars and the development of more fueling stations to serve them.

Ethanol's place in America's fuel plan continued to take shape in 2010. For example, in August 2010, Senator Jim Inhofe of Oklahoma introduced legislation that would allow states to opt out of the renewable fuel standard that required corn ethanol-blended gasoline. "The fuel blenders and gas station owners have no option but to sell ethanol-blended gasoline, despite strong consumer demand for clear gas," the senator argued, according to National Hog Farmer. The Renewable Fuels Association opposed the bill, saying the opt-out would raise fuel prices and increase America's dependence on foreign fuels. At the same time, Senator Tom Harkin from Iowa proposed legislation that would expand the biofuels industry. According to Senator Harkin's proposal, 50 percent of U.S. newly manufactured vehicles would be required to be flex-fuel capable by 2013 and 90 percent by 2015. In addition, the legislation would require major fuel stations to install at least one blender pump, with grants available up to 40 percent of the cost of installation.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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