Starch Italics 1st Edition

GIRACT

Starch Italics

GIRACT

Starch Italics Starch Italics

GLOBAL STARCH REVIEW

September/November 2009 CONTENTS

Starch Industry Overview

p.1 Management buy-out for Tamworth wheat

starch plant: AUS

Budi Acid‘s expansion with IDR 100 bio

p.2 China Starch eyes buyouts to lift market

share

Labbrand creates Chinese name, slogan

and visual identity for SweetPearl™

p.3 Penford Corp. returns to operating profit

p.4 Vedan‘s ‗safe product‘ certificates

revoked

p.5 Corn Products International - SWOT

Analysis

Genencor expands in Cedar Rapids

p.6 Work starts on USD 80 mio bio-ethanol

plant

Thailand halts tapioca starch sale to China

p.7 Fuel for thought

Western unveils USD 5 mio bio-fuels

facility

Savola sugar units sales seen rising by

41.5%

Do Increased Energy Costs Offer

Opportunities for a New Agriculture?

p.8 Potato industry to be more productive in

years ahead

ADM prospects may turn sweeter

p.9 Tate & Lyle to review capital investment

plans

Amid Threat to Food Security,

Government Opens More Farm Lands to

Foreign Firms

p.10 Brewers to begin using starch

The Chocolate Lily

Cargill, USW begin contract negotiations

Henkel's labelling adhesives meet industry

concerns

(Contents continued in next column)

Starch Industry Overview (Cont’d)

p.11 Drought, exports set to cut China's corn

stocks

p.12 Results of first six months confirm stable

business trend

p.13 Streamline Processing With Dry

Sweeteners

Company Report: ICI Pakistan Ltd.

USDA‘s coarse grain report

p.14 Shengtai Pharmaceutical, Inc Reports

Fourth Quarter and Fiscal Year 2009

Financial Results

p.16 Oil industry researches bio-fuel

GLOSSARY

bio ‗000 000 000

cpd cases per day

crore ‗0 000 000

JV Joint Venture

k ‗000

kt ‗000 tons

klpd kilo litres per day

lakh ‗00 000

lpd litres per day

mio ‗000 000

M&A Merger &Acquisition

pa per annum

t tons

tpa tons per annum

tpd tons per day

tph tons per hour

tpm tons per month

Vol.1-09 © GIRACT 2009 1

Starch Italics Global Starch Review


Management buy-out for Tamworth wheat starch plant: AUS

Grain Products Australia Proprietary Ltd. has

announced that it has signed a contract to

purchase the Tamworth Wheat Starch Plant of

Penford Australia Ltd. in a management buy-out.

Grain Products Australia is a new company

established by the operations manager of the

Tamworth plant, Henry Segerius, and a former

MD of Penford Australia, Robert Lowndes. Major

equity for the buy-out has been provided by

Barony Trust Ltd., a UK-based private family

company, as well as the plant‘s largest customer,

Itochu Corporation of Japan and its Australian

subsidiary, Itochu Australia Ltd.

Segerius will continue as operations manager for

the plant while Lowndes has been named as MD

of Grain Products Australia.

In making the announcement, Lowndes said the

Tamworth Wheat Starch Plant will increase its

product range and serve a broader range of

customers under Grain Products Australia‘s

management.

The Tamworth Wheat Starch Plant has a very

talented and dedicated workforce and is located in

the heart of prime wheat growing areas which is

important for the high quality wheat gluten and

starch we make. In Japan, gluten produced at the

Tamworth plant is regarded as the best in the

world.

―Over the next 12 months, Grain Products

Australia will invest USD 6.5 mio in new

equipment to make modified starch products,

primarily for the Japanese market. We also plan to

double production in that period to serve an

increasing number of local and international

customers‖, commented Lowndes. The sale is

expected to be completed on 27th

November 2009.

(Foodweek Online 16 Nov 2009)

Budi Acid’s expansion with IDR 100 bio Jakarta: PT Budi Acid Jaya Tbk budgeted

expenditure of IDR 100 bio to build a new

glucose factory in Solo, Central Java, and add an

additional production line at the factory in

Lampung.

Deputy President Director of the new branch tells

Sudarmo Tasmin glucose demand and promising

sweetener rise up the food and beverage

manufacturers who need additional sweeteners.

Indeed he admitted the current user-based

sweetener tapioca flour is still relatively low due

to significant differences in taste when compared

to sugar from sugar cane.

However, sugar prices are more inflated to

encourage food manufacturers and beverage

sweetener alternative glance. According to him,

lately the market response continues to grow.

Especially when the economy recovered from the

fears of the crisis so that it can grow faster than

the current which is around 4-5%.

Seeing the growth potential of these markets, the

company plans to build tapioca processing plant

in Solo to complement the company's cassava

garden. In addition, the company also wanted to

add one production line at the existing glucose

plant in Lampung. "We expect this plant

investment plus routine expenditure next year will

at least IDR 100 bio, all funds derived from cash",

he said.

Based on the company data, the capacity of

glucose factory in Lampung until December 31,

2008, as much as 32 400t

Sudarmo added that the company also offers

incentive liquid sugar products (high fructose) for

food and beverage producers. The company is

exploring the sale of the Korean importers.

(Continued on next page)

Vol. 1-09 © GIRACT 2009 2



Budi Acid’s expansion (Cont’d)

"We expect export sales to increase from the

current less than 5%", he added.

Budi Acid is the largest producer of tapioca flour

national, who also produces by-products such as

glucose, citric acid and sorbitol. The company is

part of the Sungai Budi Group.

With the expansion step, Sudarmo‘s projected

sales in 2010 grew to IDR 2 tio this year from an

estimated IDR 1.7 tio.

(Bisnis Indonesia Online 17 Nov 2009)

China Starch eyes buyouts to lift market share

HongKong: Cash-rich China Starch Holdings Ltd.

(HKD 3 838), a partner of world's largest dextrose

and cornstarch producer Corn Products

International Inc (CPO.N), said it aims to lead the

domestic market share by taking over rivals.

The company aimed to take a bigger slice of the

market, tapping growing demand from customers

as the Chinese economy recovered, said Will

Leung, financial controller of China Starch.

China Starch is China's second-largest cornstarch

producer by sales volume, accounting for 13 % of

the market. It sold 350 000 t of corn starch in

2008, behind a privately owned Shandong-based

producer with a sales volume of 500 000-

600 000 t.

"We aim to be the market leader (in China)",

Leung told Reuters in an interview, without

giving a timeframe. "We're looking to expand

capacity by acquiring producers with a capacity of

more than 100 000 t".

China Starch produces modified starch for use as

a food additive and in paper and pharmaceuticals

products through a 49 % owned joint venture with

Corn Products International. It has a production

capacity of 850 000tpa.

(Continued in next column)

China Starch eyes buyouts (Cont’d)

Leung said the company had CNY 200 mio

(USD 29.3 mio) cash in hand for acquisitions. He

added that it preferred to buy rivals in the corn-

producing provinces of Jilin and Shandong, but

did not identify any acquisition targets.

Demand for cornstarch in China is estimated at

about 6 mio tpa. Leung said he expected

cornstarch prices to remain steady in 2010 after

rising 20 % this year to CNY 2 100/t excluding

tax. China Starch also plans to expand into

higher-margin corn-based sweetener for use in

beer and soft drinks.

Leung said the Snow beer brand of China

Resources (0291.HK) was running a trial of the

new product.

The company has an initial capacity for corn-

based sweetener of 100 000tpa, expecting to

generate an annual profit of CNY 21 mio

(USD 3 mio).

Leung said the figure would rise to CNY 140 mio

as capacity was expanded to 700 000t, without

giving a time frame. Shares of China Starch have

risen 45 % so far this year.

(USD 1=HKD 7.75=CNY 6.825)

(Alibaba News Channel 17 Nov 2009)

Labbrand creates Chinese name, slogan and visual identity for SweetPearl™

Shanghai Labbrand recently assisted Roquette, the

world's leading polyol manufacturer and one of

the top starch processors from France, to develop

its sub-brand SweetPearl™ in China. Labbrand

created SweetPearl's Chinese name, adapted its

Chinese slogan from the English version, and

rejuvenated the brand‘s visual identity system.


Vol. 1-09 © GIRACT 2009 3



Labbrand creates Chinese name (Cont’d)

SweetPearl is a bulk sweetener produced from

naturally-occurring compounds in wheat and corn

which improves nutritional value and intensifies

flavor. SweetPearl has a variety of applications,

such as chocolate, bakery, and chewing gum, to

name a few.

SweetPearl's Chinese name effectively

communicates its brand message in the Chinese

marketplace. This name highlights the product

category and at the same time arouses auspicious

evocations in the consumers' minds- not only

sweetness, but also enjoyment, happiness and

creativity.

The Chinese slogan adapted from the original

English slogan "The Sweetness of Inspiration",

echoes the Chinese name, further emphasizing the

concepts of inspired creativity and sweetness.

Coupled together, the Chinese name and slogan

establish a bridge between the product itself and

consumer's emotions.

In addition to the Chinese verbal identity creation,

Labbrand also helped develop a customized brand

visual identity for SweetPearl.

By being easily recognizable and communicable

for Chinese consumers through its new Chinese

name, slogan and the rejuvenated logo,

SweetPearl will be able to successfully build its

brand in China. (Labbrand 02 Sep 2009)

Penford Corp. returns to operating profit

Cedar Rapids: Penford Corp., corporate parent of

Penford Products in Cedar Rapids, reported an

operating profit – USD 1.3 mio net income --

from continuing operations for the quarter that

ended on August 31. Sales from continuing

operations were USD 70.8 mio in the quarter, up

15 % from USD61.3 mio a year ago.

Yet Penford posted a larger net loss for the

quarter and the fiscal year when results include

discontinued operations in Australia and New

Zealand. The Centennial, Colo., company

recorded a net consolidated loss of USD 34.8 mio,

or USD 3.1/diluted share, in the quarter that ended

on August 31, compared with a USD 20.9 mio

loss, or USD 1.8/diluted share, in the final quarter

of fiscal 2008.

Consolidated sales were USD 70.8 mio in the

quarter, compared with USD 31.6 mio in the same

period last year. For the year, Penford posted a net

loss of USD 64.8 mio, compared with a

USD 12.7 mio loss the previous fiscal year. Sales

rose to USD 255.6 mio from USD 239.6 mio in

fiscal 2008.

Penford sold its New Zealand operations in

September, 2009, realizing net proceeds of

USD 4.8 mio that were used to pay down credit

debt. Agreements for the sale of the remaining

Australian operations have been signed, and the

deals are expected to close in the next several

weeks.

The company said its Cedar Rapids plant,

severely flooded last year, is positioned to shift

among industrial paper starch, specialty additives,

ethanol and food starches. Ethanol operations

continue to contribute to improving results on

higher volume and prices. Ethanol volume

represented 45% of the total product mix for

Penford's industrial segment in the fourth quarter.

(Tradingmarkets.com 14 Nov 2009)

Vol. 1-09 © GIRACT 2009 4



Vedan’s ‘safe product’ certificates revoked

Three certificates awarded to the Vedan Vietnam

company for product safety have been revoked

and those involved in bestowing the certification

will be punished, a press conference in Hanoi

heard October 27.

The head of the Directorate for Standards,

Metrology and Quality (STAMEQ), Ngo Quy

Viet, said the granting of ―Safe Product for

Community Health‖ certificates to three Vedan

products had been a serious mistake by the award

panel.

The panel comprised the Ho Chi Minh City

Representative Office of the Ministry of Science

and Technology (MOST) and the city-based

Natusi Patent Standard Quality Agent (NATUSI),

a center for trademark and quality development

consultancy.

The MOST and STAMEQ are waiting for an

official report from the ministry‘s HCM City

office before making a firm decision on the case

and punishing involved parties, said Tran Viet

Thanh, secretariat chief of the MOST.

One day earlier, Science and Technology Minister

Hoang Van Phong ordered agencies concerned to

revoke the three certificates granted to MSG and

starch maker Vedan. Minister Phong also asked

the ministry‘s HCM City office to submit a

detailed report on the certification process,

including the responsibilities of involved parties,

by October 28.

Vedan‘s long-term discharge of untreated

waste water into Dong Nai Province‘s Thi Vai

River, has caused serious pollution problems and

great suffering for people in affected areas, said

the ministry. (Continued in next column)

Vedan’s ‘safe product’ certificates revoked (Cont’d)

Moreover, Vedan has yet to compensate the

affected communities for their losses. Therefore,

certifying Vedan‘s products is unacceptable, the

ministry said. The Health Ministry suspended the

deputy head of the Department for Food Safety

and Hygiene, Hoang Thuy Tien, for his

involvement in the certification process.

Mr. Tien was the deputy chairman of the ‗Safe

Product for Community Health‘ Award Panel and

signed certificates for businesses‘ products,

including Vedan‘s.

Bui Van Quyen, chief representative of the

MOST‘s HCM City Office, said: In the course of

screening candidates, NATUSI put Vedan on its

recommendation list for the title ‗Business with

excellent quality management system‘, but the

award panel refused to accept Vedan since it has

caused serious environmental problems.

―NATUSI later suggested putting three Vedan

products, including its MSG, in the list of top 100

safe products for community health, but the panel

rejected that too‖, Quyen said. ―However, as the

head of the award‘s organizing board, I signed

blank certificates prepared by NATUSI prior to

the award ceremony. Later, NATUSI had filled

three of those certificates with the names of

Vedan products and sent them to the company‖,

he said.

Quyen also emphasized that at the award

ceremony, the organizing board did not present

the three certificates to Vedan. He admitted his

agency had made a mistake in awarding the

certificates to Vedan, as it had failed to check the

documents before they were delivered to

recipients.

Quyen also said the main responsibility fell to

NATUSI, as the agency had sent the certificates

to Vedan without reporting it to the organizing

board. (saigon-gpdaily.com 28 Oct 2009)

Vol. 1-09 © GIRACT 2009 5



Corn Products International - SWOT Analysis

London: Corn Products International - SWOT

Analysis examines the company‘s key business

structure and operations, history and products, and

provides summary analysis of its key revenue

lines and strategy.

Corn Products International (Corn Products) along

with its subsidiaries operates as a corn refiner and

a supplier of food ingredients and industrial

products, derived from wet milling and processing

of corn and other starch-based materials, such as

tapioca. The company operates in the US, South

America, Asia and Africa. It is headquartered in

Westchester, Illinois and employs about 7 800

people.

The company recorded revenues of

USD 3 944 mio during the financial year ended

December 2008 (FY2008), an increase of 16.3%

over FY2007. The operating profit of the

company was USD 434 mio during FY2008, an

increase of 25.1% over FY2007. The net profit

was USD 267 mio in FY2008, an increase of

34.8% over FY2007.

(companiesandmarkets.com 29 Oct 2009)

Genencor expands in Cedar Rapids

Des Moines, Iowa - A company that develops

enzymes for use in grain processing and laundry

products has expanded its manufacturing plant in

Cedar Rapids and opened a new applied research

center to test products in real-world situations.

Glenn Nedwin, vice president of technical

enzymes for Genencor International, a division of

Denmark-based Danisco, said that

the USD 52 mio facility will allow the company to

keep pace with the growing grain processing and

biofuels industry. Genencor, which had revenues

of USD 750 mio in the fiscal year than ended

April 30, primarily works with grain-processing

companies to improve their technology

and operations. (Continued in next column)

Genencor (Cont’d)

Enzymes are protein molecules produced by all

living organisms. They are responsible for a

number of reactions and biological activities in

plants, animals, human beings

and microorganisms. Grain processors use them

to break starch down into sugars that are

fermented to produce ethanol.

Genencor has had a smaller research center in

Beloit, Wis. But it decided against expanding that

and built its applied research center next to the

company‘s manufacturing plant in Cedar Rapids

because Iowa has been a leader in the nation‘s

bio-fuel industry.

―Our plant is not dedicated to any one product,

but since grain processing is so strong in the

Midwest, it will take up most of the volume‖,

Nedwin said. The innovation center will allow the

company to do testing on larger scale, mimicking

the processes in big manufacturing plants ―on a

smaller scale but bigger than a desk top‖, he said.

In some cases, corporate clients will send their

own staff to the center to work on new products

for grain and ethanol and learn more about how

enzymes work, Nedwin said. Mark Seckman,

president of Priority One, the economic

development arm of the Cedar Rapids Chamber of

Commerce, said Genencor‘s expansion will add to

the local economy‘s ‗strong industry cluster‘,

which includes grain processing companies such

as ADM and Cargill.

―Now we‘re bringing in scientists who will work

with customers on creating new product

opportunities – that‘s the component that is new

and different to the market‖, Seckman said.

(Chicago Tribune 11 Sep 2009)

Vol. 1-09 © GIRACT 2009 6



Work starts on USD 80 mio bio-ethanol plant

The Vietnam National Oil and Gas Group

(PetroVietnam) broke the ground of an

USD 80 mio bio-ethanol plant in Dung Quat

Economic Zone, central Quang Ngai province on

September 6. A groundbreaking ceremony was held for the bio-

ethanol plant on September 6 in Quang Ngai

Province. Construction of the plant, the largest of

its kind in the central region, will last for 18

months. Using cassava as raw material, the plant

has a designed capacity of 100 000 cubic meter of

ethanol pa.

At the ground-breaking ceremony, PetroVietnam

Financial Joint Stock Corporation (PVFC), the

Bank for Investment and Development of

Vietnam (BIDV), the Bank for Foreign Trade of

Vietnam (VCB), the Ocean Bank, the Lien Viet

Bank and the central region‘s Petroleum Bio-Fuel

Joint Stock Company signed a credit contract

worth nearly VND 1 tio for the project.

The plant, the second of its kind being built by

PetroVietnam in Vietnam, is part of the country‘s

bio-fuel development plan to 2015 with a vision

to 2025.

Earlier, PetroVietnam kicked-off the construction

of a bio-ethanol plant in northern Phu Tho

province. The group plans to build the third one in

southern Binh Phuoc province in 2010. According

to PetroVietnam, 47% of ethanol in the world is

extracted from sugarcane and 53 % from starch.

In Vietnam, ethanol is currently produced mainly

by Hiep Hoa Sugar Factory, Lam Son Sugar

Factory and Binh Tay Beverage Factory, which

churn out 15 000-30 000 l of ethanol per day.

(Vietnam News Agency 07 Sep 2009)

Thailand halts tapioca starch sale to China

Bangkok: Thailand temporarily halted tapioca

starch deals with China saying the prices

proposed were too low. Thailand‘s Tapioca Policy

Committee turned down a Commerce Ministry

proposal to sell 200 000t of tapioca starch under a

government-to-government contract to China.

The rejection has reportedly baffled the

Commerce Ministry, as the deals were said to be

handled according to conditions and guidelines set

by a similar committee earlier.

The conditions oblige the government to sell

tapioca starch at between THB 7 600/t and

THB 8 100/t. China's Ming Yang from Guangxi

had proposed to buy 200 000t of tapioca starch

from the Thai government at THB 7 950/t.

Thailand needs to re-negotiate for a better price,

as the proposed price is lower than that paid by

Thai firms to buy government stocks.

Analysts said the rejection was unlikely to affect

relations between the two countries, as China is

now rich and can afford tapioca starch at higher

prices.

In other deals, Thailand agreed to sell 340 000tof

tapioca chips at THB 4 800/t to 8 exporters, and

another 100 000t of tapioca chips at THB 4 477/t

to 3 companies for sale domestically.

Thailand is the world's biggest exporter of tapioca

products, controlling 75% of the global market.

Exports take the form of chips, pellets and flour.

The government is currently estimated to hold

about 400 000t of tapioca starch and 1.7 mio t of

chips. (Commodity Online 05 Nov 2009)

Vol. 1-09 © GIRACT 2009 7



Fuel for thought

Barry Park: Why is ethanol cheaper?

Ethanol in petrol in low concentrations is regarded

more as a fuel extender than a fuel alternative.

Ethanol is made from grain starches or sugars. In

Australia the main sources of ethanol production

are wheat and sugar cane. Australian ethanol

production for fuel use is heavily subsidised.

An AusIndustry scheme introduced in 2003 has

paid back the USD 0.03/l in excise that ethanol -

and petrol - producers are charged.

The subsidy, which cuts out in 2011, has handed

more than USD 50 mio back to ethanol producers

since 2003. 1 l of ethanol can be made for about

USD 0.07 once the excise is reimbursed.

In the last financial year, about 40 mega l of fuel-

grade ethanol was produced in Australia - enough

to fill about 16 Olympic-sized swimming pools.

(watoday.com.au 22 Aug 2009)

Western unveils USD 5 mio bio-fuels facility

The University of Western Ontario opened a new

USD 5 mio bio-fuel facility today and unveiled the

first sale of a university-developed harvester that

turns agricultural byproducts into a material for

creating fuels, chemicals and fertilizers.

The portable unit can be hauled from one farm

field to the next to process waste such as corn

husks into a solid bio-char and bio-oil.

This material then becomes an eco-friendly

ingredient in fertilizers, fuels and chemicals,

including environmentally friendly insecticides

and pesticides. (Western News 16 Oct 2009)

Savola sugar units sales seen rising by 41.5%

Saudi-based Savola Group, the Middle East's

biggest sugar refiner, expects its turnover from

sugar units in Egypt and Saudi Arabia to rise

41.5% this year, a top executive said on Sunday.

'This year, the two refineries should generate a

turnover of SAR 3.48 bio (USD 928 mio), up

from SAR 2.46 bio in 2008', Zouhair Eloudghiri,

CEO of Savola Foods told Reuters.

He was speaking after Savola announced it had

reached an agreement to buy minority stakes held

by British sugar refiner and sweetener group Tate

and Lyle Plc's in sugar refineries in Egypt and

Saudi Arabia.

The deal covered the purchase from Tate and Lyle

of a 3.5% stake in a sugar refinery in Egypt and a

9.6% stake in another refinery in Saudi Arabia.

Savola did not disclose the value for the deal.

Tate and Lyle wants to focus on sugar within

Europe and on the production of starches,

sweeteners and ethanol, Eloudghiri said.

(forbes.com 25 Oct 2009)

Do increased energy costs offer opportunities for a new agriculture?

The burgeoning human population is also rapidly

increasing with rate of consumption as individuals

change diets. According to some estimates, global

meat consumption will double or triple by 2070.

The production of meat using grains such as corn

and soybeans that could be directly consumed by

humans as food is an inefficient way to supply

both calories and protein to people.

(Monthly Review Nov 2009)

Vol. 1-09 © GIRACT 2009 8



Potato industry to be more productive in years ahead

China is reportedly to be the single largest

producer of potatoes in the world with a quarter of

the total global acreages under potato, and its total

output accounts for one fifth of the global total. Its

per-unit output, however, is merely 14.4t/hectare,

much lower than the global average level.

This is owed solely to the shortage of de-virus

good seed potato strains. Now-a-days, the "de-

virus" seed potato strain sown area is only about

20% of China's total potato acreage, whereas such

fine seed potato planted area in some developed

nations could reach 90% at least, according to the

Vegetable and Flower Research Institute affiliated

to the Chinese Academy of Agricultural Sciences.

Nevertheless, it is projected that China's potato

starch demand would be as much as 3 mio t by the

year 2030, when the country could become a

center for potato producing and processing as well

as trade in the Asia-Pacific region and world at

large. (People’s Daily Online 23 Oct 2009)

ADM prospects may turn sweeter

Decatur, Ill: Archer Daniels Midland Co. told

investors that the second half of 2009 had left a

bitter taste in the mouth, but prospects may be

about to turn sweeter.

Results for the first six months of the previous

fiscal year had been strong, buoyed by robust

earnings from oilseeds and even record returns

from the company's agricultural services segment.

Patricia Woertz, ADM's chairwoman, CEO and

president, said things had curdled later on. "In the

second half, we felt the full impact of the

recession", she said, speaking during the

company's annual general meeting at its Decatur

headquarters.


ADM prospects (Cont’d)

Ethanol margins tanked amid a general downturn

that blighted business across the board. Net

earnings for the whole year finished at

USD 1.7 bio on essentially flat revenues of

USD 69.2 bio. First-quarter results for the new

fiscal year, announced on Tuesday, continued the

downward trend. Profits dipped 53% on earnings

of USD 0.77/share, compared to USD 1.6/share at

this time last year.

Those down numbers, however, do seem to be the

start of better things. Wall Street analysts had

predicted the company would only make a profit

of USD 0.57/share. ADM also announced a cash

dividend of USD 0.14/share, bragging to investors

this was the 78th

straight year of uninterrupted

dividend payments despite financial ups and

downs.

Woertz said prospects for future results look good

as the world economy shows increasing signs of

pulling out of recession. She said ADM is

positioning itself to take advantage of market

opportunities by a strategic program of key

investments.

In Decatur, she pointed to the completion of the

first phase of a glycols plant that will provide yet

another chemical use for starch from corn milling

or glycerin produced from the company's

biodiesel operations. A plant to manufacture

PHA, a renewable plastic, is scheduled to start

production later this year.

Shareholders approved an executive

compensation package that aims to tie rewards to

overall company performance. That saw the

‗direct compensation‘ paid to Woertz in 2009 -

salary, cash incentive, equity grants - drop by

more than 32% to USD 10 890 384. The total

value of her annual compensation, including

changes in pension value and deferred

compensation earnings, came in at

USD 15 466 064, off from 2008's overall figure of

USD 17 739 017. (QcTimes 06 Nov 2009)

Vol. 1-09 © GIRACT 2009 9



Tate & Lyle to review capital investment plans

Javed Ahmed, the new chief executive of Tate &

Lyle, is carrying out a review of the group's

approach to capital investment, an area in which it

has had high-profile setbacks.

Ahmed succeeded Iain Ferguson at the helm of

the starches and sweeteners group at the start of

October, joining the group from Reckitt

Benckiser, the consumer products maker.

Under the stewardship of Ferguson, Tate

embarked on a four-year programme of heavy

capital investment before embarking on a recent

purge of spending and working capital designed

to reduce its borrowings.

The purge has been well received on the stock

market, helping Tate shares more than double in

value since a March trough.

The preceding capital expenditure has had mixed

results, however. The company has postponed the

opening of a new corn-milling facility in Fort

Dodge, Iowa, that was being built to produce

ethanol for the bio-fuels market, as well as

industrial starches.

It has also mothballed a previously expanded

sucralose factory in McIntosh, Alabama, arguing

that a scientific breakthrough had made it

unnecessary. Other capital expenditure, such as an

expansion of a starches plant, has gone to plan.

Ahmed announced that he was reviewing Tate's

approach to capital investment with the aid of

outside experts in a brief statement to analysts as

the group announced its interim results. Ahmed

gave nothing else away about his future plans at

the group. (Continued in next column)

Tate & Lyle (Cont’d)

In the six months to September 30, the final

period under Ferguson's leadership, Tate's sales

were GBP 1.8 bio, an increase of 7%. Excluding

the effects of currency fluctuations, sales declined

5%.

Pre-tax profit declined 59% to GBP 50 mio,

reflecting a GBP 55 mio charge linked to the

mothballed sucralose plant.

(Financial Times 07 Nov 2009)

Amid threat to food security, Philippine government opens more farm lands to foreign firms

Manila: The recent typhoons highlighted land and

crop use conversion as a factor in worsening the

effects of disasters on food production and the

need to ensure adequate land for food production.

However amid all these, the government has

reserved more hectares of agricultural land for

export crops and use of foreign agro-corporations.

According to the Philippine Agricultural

Development and Commercial Corporation,

1.5 mio hectares of land have been developed for

agribusiness since 2005, most of which are for

planting high value commercial crops to be

exported to other countries. Government has also

approved 3 mio hectares for foreign agro-

corporations, which includes 60 000 hectares to

Pacific Bio-Fields Corp. of Japan.

While the disaster will likely affect food

production, IBON said that this would have been

mitigated if agricultural lands were maintained

and harnessed for food production. The impact of

land use and crop conversion on the production of

staple crops has been evident in the last decades.

Since the 1990s, farm area planted to palay fell by

more than 87 000 hectares while that of corn was

reduced by almost 300 000 hectares. Such

decrease in the farm area spelled the massive

displacement of Filipino farmers.

(bulatlat.com 21 Oct 2009)

Vol. 1-09 © GIRACT 2009 10



Brewers to begin using starch

For the first time in decades, world beer

consumption is set to decline, a leading Norfolk

molester has warned barley growers. Bob King,

commercial director of the Crisp Malting Group,

said that the global credit crunch and recession

had hit sales.

For the past 30 years, beer sales had risen at about

2.5% each year, he told about 50 members of Holt

& District Farmers' Club. "And in 2007 and 2008,

annual growth was 5-6% - a phenomenal quantity

and driven very much by China", he added.

King said that the five biggest falling beer

markets included Japan, Germany, Britain and

Korea, which had been the fastest-growing in

Asia. In Japan, punitive duties on imported malt

forced brewers to use alternatives including starch

and peas. (edp24.co.uk 17 Oct 2009)

The Chocolate Lily

Alaska: Regardless of the questionable fragrance,

the chocolate lily roots have reportedly been a

staple food source for native people since

prehistoric times.

They are usually dug in fall after the foliage has

yellowed and the plant is storing starches and

sugars for the upcoming winter. Although not

rice, the root resembles tight clusters of white rice

around a main bulb. It is all edible but it‘s

necessary to put a few grains back in the hole to

replant. (capitalcityweekly.com 14 Oct 2009)

Cargill, USW begin contract negotiations

The United Steelworkers‘ international

representative for USW District 7, Bob Lofton,

said that contract negotiations have started

between Cargill Inc. and a group of unionized

employees at its Hammond corn milling facility.

He said that talks would continue in the next few

weeks. The current contract for about 142

production and maintenance employees a part of

USW Local 7-209 expires on Wednesday.

District 7 represents Indiana and Illinois. Lofton

didn't provide more information on the state of

bargaining.

The facility at 1 100 Indianapolis Blvd. produces

modified food starch and sweetener products for

the food industry. (nwi.com 26 Sep 2009)

Henkel's labelling adhesives meet industry concerns

Australia: Henkel‘s recent USD 5 bio acquisition

and integration of the adhesive and electronic

materials business of National Starch and

Chemical in 2008 has almost doubled the

company‘s market share worldwide.

The acquisition has elevated Henkel to the

number one position in the industrial adhesives

market. As a result of the acquisition, the

company believes it is in an even better position

to leverage its combined technology for the

benefit of customers.

―At a regional level, we have completed almost

90 per cent integration of National Starch", says

Charlie Page National Sales Manager for

Henkel‘s Consumer Packaging and Graphic Arts

operations.

"The combined product portfolios and the

advanced technology, the strengthened business

brings to customers are substantial.

(packagingmag.com.au 16 Oct 2009)

Vol. 1-09 © GIRACT 2009 11



Drought, exports set to cut China's corn stocks

Dalian, China: China's huge corn stockpiles are

set to dwindle as a drought threatens to cut this

year's harvest, with the government ready to use

export subsidies if supply worries fail to keep

local prices buoyant.

The drought in China's main corn-growing areas

may cut this year's harvest by 12 mio t, or 7.5%,

from 160 mio t in 2008, said Yue Guojun,

assistant president of China's largest grain trader

and corn processor COFCO.

The drought was serious, he said, but a larger

planting area this year would ease the impact. It is

unlikely to be felt by consumers since China has

built a reserve estimated at 36 mio t that can be

put on the market if prices rise.

"In the coming years, we don't see any need for

imports. China is basically balanced in corn

supply and demand", Yue told reporters on the

sidelines of a conference in Dalian.

Good sales of corn starch and alcohol mean corn

processors are operating at higher rates than in

early 2009, he said. Consumption is likely to be

similar next year, since there has been no

expansion of processing capacity this year.

Demand from feed mills could grow because of a

U.S.-China trade dispute, he said. That could

weigh on chicken imports, causing China's own

poultry numbers to increase.

But the chairman of the country's top feed mill,

New Hope Group (NWHOP.UL), said China

needed to start preparing its corn market for

imports. "We expect to see a turning point in

about three years, due to solid demand from feed

mills and also from processors", New Hope

chairman Liu Yonghao said.


Drought, exports set to cut China's corn stocks (Cont’d)

"The government should study corn policy and be

prepared as China's feed demand will continue to

grow at an average of 5% a year due to increasing

urbanisation", he said.

Liu said 60% of China's corn went into animal

feed and 25% was processed, leaving little for

human use. New Hope alone needed over 15 mio t

of corn a year.

A company official previously told Reuters that

an earlier attempt to import a small volume of

U.S. corn in containers had prompted quarantine

authorities to hold the shipment for months.

"If the US corn price plus the freight rate enjoys a

price advantage over Chinese corn, we will

consider imports. We are keeping an eye on this",

Liu said. But Li Ming, COFCO's assistant

president and GM of COFCO Agri Trading and

Logistics, dismissed Liu's comments as one

company's opinion.

"The Chinese government will not relax control

because the government is aiming at 95% self-

sufficiency. If China imports more, it will drive

up the international price. At the same time the

U.S. is using more corn for ethanol production".

He said the government has started an export

programme to ease pressure on its stockpiles,

although the price difference between domestic

and international markets meant no deals had yet

been done.

"Based on Dalian corn prices, even with the

government subsidies, the price is still at least

USD 10/t higher than US corn to South Korea and

Japan", a senior trading manager with an

international trading house, said. "So far we

haven't heard of any deals being done", he added.

(alibaba.com 17 Sep 2009)

Vol. 1-09 © GIRACT 2009 12



Results of first six months confirm stable business trend

Germany: The international sugar, starch and fruit

company, Agrana, showed a stable and

satisfactory business performance in the first half

of the 2009-10 financial year.

The key contributing factors were the falling raw

material and energy prices, the normalisation in

exchange rates, full utilisation of all capacity,

implementation of cost-saving measures, and

intensified marketing.

In the first half of the 2009-10 financial year

(March - August, 2009), Group‘s revenue was

EUR 1 034.2 mio, or very slightly below the year-

earlier level of EUR 1 045.5 mio; the difference

of EUR 11.3 mio was the result mainly of lower

selling prices.

While there was a quota- and price-induced

decrease of 3.2% in the Sugar segment's revenue

to EUR 371.4 mio, revenue was virtually

unchanged in the Fruit segment (at

EUR 411.0 mio compared to EUR 408.3 mio in

the first half of the prior year) and in the Starch

segment (at EUR 251.8 mio, compared to

EUR 253.6 mio).

The Group's operating profit before exceptional

items, at EUR 43.9 mio, returned to a level in line

with that of two years earlier and significantly

surpassed the prior-year comparative period's

deficit of EUR 7.8 mio.

The profit improvement was driven largely by the

starch segment, where the easing raw material

prices had a positive effect on margins.


Results of first six months (Cont’d)

First half of the financial year AGRANA - IFRS

results for the six months ended on 31 August:

(EUR mio)

2009-10 2008-09

Revenue 1 034 1 045.5

Operating profit/loss

before exceptional items

43.9 7.8

Operating profit/(loss)

after exceptional items

43.9 10.1

Profit/(loss) before tax 46.4 18.1

Profit/(loss) for the period 34.8 21.4

Earnings/(loss) per share 2.46 1.39

Revenue by segment: (EUR mio)

2009-10 2008-09

Sugar 371.4 383.6

Starch 251.8 253.6

Starch segment: In the first half of 2009-10, the

Starch segment's revenue was almost constant in

relation to the last year period, at EUR 251.8 mio.

The chief contribution to the revenue stabilisation

came from the full utilisation of the bio-ethanol

plants in Austria and Hungary.

Lower starch-selling prices and the volume

reductions in industrial starch sales caused by the

weak economy were largely made up through

volume growth in starch products for the food

industry. Operating profit before exceptional

items was EUR 20.4 mio, well above the prior-

year amount of EUR 0.4 mio, which still reflected

the high commodity and energy prices.

In the Starch segment, despite full utilisation of

the bio-ethanol capacity in Austria and Hungary

and the probable volume increase in sales of

starch products, lower grain prices are expected

to lead to a price-induced decrease in revenue.

(presseecho.de 15 Oct 2009)

Vol. 1-09 © GIRACT 2009 13



Streamline Processing With Dry Sweeteners

The majority of foods and beverages call for some

sort of sweetener, and natural sweeteners, such as

honey, molasses or malt extract, are very much in

the formulation spotlight these days.

In addition to adding sweet taste to foods, these

ingredients contribute color, aroma, browning and

texture, as well as help improve moisture

retention and extend shelf life.

However, not all formulations are ideally suited to

liquid sweeteners, and sometimes a dry ingredient

is a requirement. Liquid ingredients can pose

handling and storage challenges—and can be

subject to flavor and color variability.

Therefore, ADM offers standardized dry versions

of these sweeteners that not only improve

handling and facilitate easier storage, but also

help streamline processing and improve

consistency without compromising the beneficial

qualities inherent in their liquid counterparts.

ADM dries liquid honey, molasses and malt

extract on a wheat-starch carrier, which

diminishes hygroscopicity and the potential for

caking during storage.

The wheat starch can also help add desired

viscosity to some foods. The dried sweeteners are

then converted into free-flowing powders.

Calcium Stearate or silicon dioxide is sometimes

added to the powder to improve flow ability.

―Dry sweeteners are ideally suited for applications

like fish and seafood breading, dry sauce mixes,

pancake and waffle mixes, breads and muffins,

gingerbread, and brownies‖, says Dan Larson,

vice president, Lecithin and Dried Sweeteners.

(foodproductdesign.com 16 Oct 2009)

Company Report: ICI Pakistan Ltd.

Pakistan: ICI Pakistan Ltd. ranks as one of the

largest multinational companies operating in

Pakistan. The company is a leading manufacturer

of Polyester, Soda Ash and Paints that

established as a public limited company in 1952.

The diversified business portfolio of ICI

comprises of five segments namely: 1) Polyester

Staple Fiber 2) Soda Ash 3) Paints 4) Chemicals

and 5) Life Sciences, which caters the need of

wide range of industries (like textile, glass,

detergents, agriculture, construction, paper &

packaging and autos etc.) and home consumers.

Life Sciences Business of ICI Pakistan mainly

occupies three divisions viz., Pharmaceuticals,

Animal Health and Seeds. This segment has a

share of 10% in total revenues and 14% in

combined operating profit. Chemicals segment

comprises of Specialty Chemicals, General

Chemicals and National starch products.

(Daily Times 11 Oct 2009)

USDA’s coarse grain report:

U.S. feed grain supplies for 2009-10 are

projected higher this month as increased corn and

barley production and higher sorghum beginning

stocks more than offset lower corn carrying and

reduced sorghum production. September 1 corn

stocks, as reported in the September 30 Grain

Stocks report, reduced 2009-10 corn beginning

stocks as higher corn use for ethanol, sweeteners,

starch, and exports boosted June-August use.

Corn production for 2009-10 is forecast 63 mio

bushels higher with a 2.3-bushel-per-acre yield

increase more than offsetting a 700 000 acre

reduction in harvested area. Total corn supplies

are projected 42 mio bushels higher. Total U.S.

corn use for 2009-10 is increased 5 mio bushels.

Feed and residual use is projected 50 mio bushels

higher reflecting the higher forecast yield and

crop. (Continued on next page)

Vol. 1-09 © GIRACT 2009 14



USDA’s coarse grain report (Cont’d)

Food, seed, and industrial use is also projected

higher, up 5 mio bushels, on higher expected use

for sweeteners with tight sugar supplies.

Offsetting most of the increase in domestic use is

a 50 mio bushel-reduction in projected exports.

Increased supplies of feed grains in Canada and

larger world wheat supplies are expected to

increase competition for U.S. corn exports. Corn

ending stocks for 2009-10 are projected 37 mio

bushels higher and just below the revised

estimate for the 2008-09 marketing year.

Global coarse grain supplies for 2009-10 are

increased 4.7 mio t, mostly reflecting higher corn

beginning stocks and increased barley output.

Global corn beginning stocks are raised 2.2 mio t

with upward revisions to 2008-09 production for

Brazil and South Africa, and higher reported

stocks for Canada.

Barley production is raised 4.4 mio t with higher

output in Russia, Algeria, EU-27, the United

States, Canada, and Australia. Global corn

production for 2009-10 is lowered 1.5 mio t with

reductions for China, Russia, and a number of

smaller countries only partly offset by increases

for the United States, EU-27, Ukraine, Canada,

and several Sub- Saharan African countries.

China corn production is lowered 5.0 mio t on

confirmation that unusual heat and dryness

during late July and early August severely

hampered corn pollination in the western

growing areas of the northeast.

Increased harvested area for China partly offsets

this month‘s yield reduction. World coarse grain

imports and exports are both projected lower for

2009-10 mostly reflecting reduced prospects for

U.S. corn exports, down 1.3 mio t, and lower

expected corn imports by Canada, down

1.5 mio t.


USDA’s coarse grain report (Cont’d)

Other mostly offsetting corn trade changes include

lower imports for Chile and higher imports for

Colombia. Reduced barley exports for EU-27 are

partly offset by an increase for Russia. Global

coarse grain feeding is raised 3.5 mio t as higher

corn feed and residual use for the US, China,

Brazil, EU-27, Mexico, Ukraine, and Colombia

are only partly offset by reductions for Canada and

Chile.

Barley feeding is raised for Russia, Algeria,

Ukraine, Australia, and Canada. Global coarse

grain ending stocks are nearly unchanged from last

month as a 2.9 mio t-reduction in corn stocks is

more than offset by a 3.3 mio t increase in barley

stocks. Global barley ending stocks are projected

at a 5-year high.

(agweb.com 19 Nov 2009)

Shengtai Pharmaceutical, Inc Reports Fourth Quarter and Fiscal Year 2009 Financial Results

Shandong: Shengtai Pharmaceutical, Inc. (OTC

Bulletin Board: SGTI), a leading manufacturer and

distributor of high-quality, pharmaceutical grade

glucose products in China, reported financial

results for the fourth quarter and the fiscal year

ended on June 30, 2009.

"Fiscal year 2009 had been challenging. The world

economic crisis had impacted our operation. Our

cornstarch and its by-products had generated lower

sales volume and lower average selling prices

(ASP)", Qingtai Liu, Shengtai Pharmaceutical's

CEO, said.

"However, we are glad to see that our key business

glucose had generated higher sales volume and

sales revenue. We are also seeing market recovery

for the cornstarch and it‘s by products".


Vol. 1-09 © GIRACT 2009 15



Shengtai Pharmaceutical (Cont’d)

Mr. Liu continued, "As the economic environment

is improving, we have initiated a series of

measures to embrace coming opportunities. We

will focus on gaining higher glucose market share,

controlling cost, and putting more focus in

developing higher value added corn starch based

products".

Fiscal Fourth Quarter 2009 Financial Results:

For the fiscal 2009 fourth quarter, sales revenue

was USD 24.10 mio, a 7% decrease as compared

with USD 25.84 mio for the same period in 2008.

Gross profit for the fourth quarter of fiscal 2009

was USD 1.3 mio, a decrease of 75% as compared

with USD 5.31 mio in the same period in 2008.

Gross margin was 5.5% for the 2009 fourth

quarter as compared with 20.6% for the same

period in 2008.

Operating loss for the fiscal 2009 fourth quarter

was USD 1.5 mio, a decrease of 152% as

compared with USD 3 mio operating income for

the same quarter a year ago. The operating margin

reached 6.5% in the fourth quarter of 2009 as

compared to 11.8% for the same period in 2008.

Net loss was USD 2.1 mio, a decrease of 169% as

compared with net income of USD 3.1 mio in the

fourth quarter last year. The fully-diluted loss per

share was USD 0.1, a 171% decrease as compared

to earnings per share USD 0.1 for the same

quarter a year ago.

Fiscal Year 2009 Results:

For the fiscal year 2009 ended June 30th

, net

revenues decreased 19% to USD 73.3 mio from

USD 90.8 mio in fiscal year 2008.


Shengtai Pharmaceutical (Cont’d)

The decrease in sales was largely due to lower

sales units and lower averaging selling prices of

cornstarch and other products including fibers,

dextrin, corn embryo, protein powders, and

phytin.

Glucose sales revenue increased slightly in FY09.

Glucose products accounted for 50.31% of the

total net revenues in FY09. Revenue from exports

accounted for approximately 14% of total revenue

in FY09.

Gross profit in fiscal year 2009 was USD 7.5 mio,

a decrease of 63% from USD 20.2 mio a year ago.

Gross profit margin was 10.3%, a decline from

22.3% for fiscal year 2008. The gross margin

decline was mainly due to lower averaging selling

prices (ASP) and higher unit costs due to idle

capacity.

Selling, general and administrative (SG&A)

expenses for the fiscal year ended on June 30,

2009, were USD 8.61 mio, an increase of

USD 1.22 mio, or 16% compared with fiscal year

2008. The increase in our sales, general and

administrative expenses was the result of the

higher worker insurance requirements related

expenditures.

The increased expenses of expanding our sales

network also contributed to the higher general

and administrative expenses. In addition, the

company also recorded a non-cash stock option

expense totaling USD 635 272 during FY2009.

R&D expenses for the fiscal year ended on

June 30, 2009, were USD 0.3 mio. There were no

such expenses in the same period of 2008. The

expenses relate to our effort to develop high

value added products. Currently we have not

successfully completed our development but we

will focus on developing high value-added

products to increase our gross margin.

(PRNewswire 28 Sep 2009)

Vol. 1-09 © GIRACT 2009 16



Oil industry researches bio-fuel

Outright ownership is significant, but oil

company investment in bio-fuels research is also

important. It will take a variety of business

models, investors and technologies for the bio-

fuels industry to achieve its full potential, says

Bob Dinneen, president and CEO, Renewable

Fuels Association (RFA).

The investment in bio-fuels research is

significant. BP, for example, is investing

USD 500 mio in The Energy Biosciences

Institute that includes the University of

California-Berkeley, Lawrence Berkeley

National Laboratory and the University of

Illinois.

Last summer, ExxonMobil announced it would

invest USD 300 mio into in-house algae research

and another USD 300 mio in Synthetic

Genomics, a genetics firm that has developed

techniques for harvesting algal oils and

increasing lipid content of algal strains.

In the biodiesel business, Chevron has been the

most visible with its efforts, including a biodiesel

feedstock development and testing agreement

with Solazyme, a synthetic biology company

based in South San Francisco, CA.

―Refiners have not been very involved with

biodiesel until now‖, says Joe Jobe, CEO,

National Biodiesel Board (NBB). ―Things have

changed because refiners are the obligated

parties for fulfilling the requirements of the new

Renewable Fuels Standard [RFS-2]‖. In 2010,

650 mio gallons of biodiesel must be used.

Pipeline companies, midstream partners and

terminal companies have made the most

significant investments in biodiesel, Jobe says.

―As the RFS-2 begins to kick in, having biodiesel

blends on the pipeline will become important to

improving the economics of distribution‖, he

explains.


Oil industry (Cont’d)

Valero's move in the ethanol industry might have

the most significant impact on the biodiesel

industry as well, says Jeff Stroburg, chairman

and CEO of Renewable Energy Group, one of

the country's largest biodiesel producers and

marketers. This is because Valero has shown that

volume matters.

―Valero entered the ethanol space when it could

buy enough volume to make it significant for

them‖, Stroburg says, adding that consolidation

in the biodiesel industry will likely continue. ―I

don't know what the magic size will be, but the

five-million-gallon-or-smaller plants probably

won't be able to sustain themselves. Market

saturation will determine the optimal size‖.

This does not necessarily mean that oil

companies are going to take over the biodiesel

business, Stroburg says. ―Look at other facets of

the energy business‖, he states. ―Oil producers

don't own all the pipelines or retail stores, for

example‖. While some companies will be fully

integrated, others will be satisfied with letting the

biodiesel plants produce the fuel because they are

more efficient at it.

―We'll see a variety of ways that oil will work

with ag‖, Stroburg says. What business models

will develop is anyone's guess, but oil companies

will want assured volumes with assured quality.

―It is critical to understand that, if biodiesel is to

be successful, it is only to the extent that oil and

ag do mix‖, says NBB's Jobe. ―We have about

2.5 bio gallons of plant capacity, mostly owned

by farmer co-ops, individual investors and small

companies. Many are in rural areas near

feedstock sources. We're not seeing a trend of oil

companies trying to buy biodiesel plants. We're

working to foster stronger relationships with the

oil industry because they are becoming bio-

diesel's biggest customer, especially as RFS-2

gets implemented‖.


Vol. 1-09 © GIRACT 2009 17




―Ultimately, oil and ag will find a balance that

allows both interests to succeed‖, says RFA's

Dinneen. ―We will see a variety of business

models, including the co-op model that has

helped build the industry we see today. Changes

in technology and the natural evolution of the

industry will render the version we know today

unrecognizable five years from now‖.

Growers benefit:

Rick Tolman, CEO, National Corn Growers

Association (NCGA), notes that the association

has a good working relationship with the

American Petroleum Institute and points out that

7% of the fuel business is accounted for by

agriculture, through its use of fuel, crop

protection products and so on.

Tolman does not think that the oil industry will

buy out the ethanol business but adds that NCGA

is looking for ways to get producers more of an

equity share of the ethanol business rather than

being suppliers alone.

What crop producers can do to benefit from the

bio-fuels market is to get closer to the end

markets or consumers of their product, JJ&A's

Starkey says.

―In the case of ethanol, they need to know the

value of their product to the refiner. We call this

the blend value. JJ&A calculates this value along

with other gasoline components every week in its

Fuels & Blendstock report‖.

―Growers should look at every opportunity. If

that means growing another crop, they should be

open-minded and ready to do it‖, Tolman says.

One of the first opportunities would be to sell

residues from corn to ethanol plants buying

corncobs and stover feed-stocks.



Tolman is surprised that there has not been more

contracting in the ethanol business. With the

continued development of traits, such as high-

amylase corn, there could be more contracting.

Wallace Tyner, professor of agricultural

economics, Purdue University, suggests that

growers interested in the bio-fuels market

develop a diversification strategy. This could

include putting a portion of their acreage into an

energy crop. Corn stover could be a real revenue

enhancer, he says.

Crop producers must also bear in mind that the

corn-based ethanol industry is very close to

producing 12.9 bio gallons specified in the RFS

for 2010. When that ―blend wall‖ is hit, the EPA

cannot require gas companies to blend more

ethanol than they are legally permitted to blend.

As long as there is a blend wall, there will be ―no

room at the inn‖ for cellulosic ethanol because

corn will satisfy the required level, Tyner says.

Butanol:

At the same time, development continues on

next-generation fuels, which can be made from

corn starch or sugar beets, for example. Butanol

has benefits over ethanol in that it can be blended

in higher concentrations without engine

modifications and does not separate out in water.

Tyner points out that butanol has higher energy

content than ethanol, which would improve miles

per gallon.

Butanol is classified as an advanced bio-fuel in

the RFS-2, and it receives a tax credit from the

IRS, just like ethanol, says JJ&A's Starkey. ―The

reason that butanol is not used more today is that

it is very expensive, and no one has developed a

technology yet that can make it competitive with

ethanol on a large commercial scale‖, he says.

Documents

Starch Italics 1st Edition