Green Plains to Shift its Focus Away from Ethanol to Feed

Posted on Wed, 02/12/2020 - 16:18

Green Plains Inc., one of the U.S.’s largest ethanol producers is planning a major about face in its business model, as the company plans to make high-protein, corn-based animal feeds its new flagship product, capitalizing on strong feed demand in the United States and abroad. Ethanol will now take on the role of a low-margin co- or byproduct. Green Plains Inc. plans to invest $400 million over the next two or three years at its 13 plants to make the transition.

The shift is reflective of the tough environment for the ethanol sector that has struggled to weather an export-limiting trade war, a downturn in prices and liberal use of hardship waivers that undercut the Renewable Fuel Standard. The trade war with China has now come to an end and it would appear that ethanol blending may be held above 15 billion gallons in the years ahead, but actual benefits of this will take time to materialize and time is running out for a number of plants.

“We will start to transform, with ethanol as a co- or byproduct," Green Plains Chief Executive Todd Becker said in a recent interview. "We think that is the only way to thrive long term in an industry like this." He described today’s ethanol industry as “oversupplied and undisciplined.”

Green Plains says it will start production of its new feed in February at its Shenandoah, Iowa plant.