May 17, 2007

 

US constructs more grain silos over ethanol boom

 

 

In Nebraska and other Corn Belt states in the US, the surging corn production due to high prices and swelling demand for ethanol has paved way for a historic construction of large grain silos.

 

Dave Fairfield of the National Grain and Feed Association said every company from the grain industry is adding storage because of ethanol production.

 

Total grain storage capacity in 2006 jumped by nearly 298 million bushels in the top four corn-producing states of Illinois, Iowa, Nebraska and Minnesota-up 3.4 percent from the previous year, according to the US Department of Agriculture. In Nebraska alone, off-farm grain storage has increased by 6 percent and total capacity by more than 62 million bushels during the year.

 

As more corn is being planted, more of it also goes to ethanol plants as the amount used for the biofuel has increased by 575 million bushels last year and comprised more than 18 percent of the aggregate corn consumption by 18 percent. According to the National Corn Growers Association, the increase in corn usage is up by 14.6 percent from 2005.

 

Over the last two years, the Midwest Farmers Cooperative has overseen the construction of 2.3 million bushels of additional grain storage space, mainly steel silos.

 

Farmers have also relegated other crops for corn and have built more storage space for the grain. Thanks to advances in genetics, yields per acre have also become higher.

 

Much of that extra corn is feeding nearby ethanol plants, so more corn is staying closer to where it is planted. In Nebraska, there are about a dozen plants operating, 15 under construction and several more being planned.

 

Randy Robeson, general manager of Frontier Cooperative, which built two 700,000-bushel silos in Mead last year said facilities are need to feed the market throughout the year.

 

The largest manufacturer of steel storage tanks in the world, GSI Group, saw sales increase more than 20 percent each of the last two years. It anticipates sales this year could jump 30 percent over last.

 

According to Burl Shuler, GSI's vice president for sales and administration, double-digit sales increases for two consecutive years is "unprecedented".

 

However, the mushrooming of silos is seen to wane due to water supply concerns. According to Fairfield, water is very significant in corn plantation and ethanol production. Corn states such as Kansas and Nebraska face severe water problems in some areas.

 

Lawrence Scanlan, sales manager of Kansas-based Frisbie Construction Co., a major builder of grain silos, said the current increase in grain storage has seen the sharpest rise in his 37 years in the business but stressed "you can't make ethanol if you don't have water".