BLAIR, Nebraska (Reuters) - From the road, an hour north of Omaha, the giant industrial plant looks like a typical oil refinery, sprawling over more than 600 acres with massive storage drums, miles of piping, clouds of steam and exhaust.
But this refinery is tied more to corn oil than crude oil.
It also presents visitors with an intriguing glimpse into what boosters like President Barack Obama call “the green economy,” an industrial base centered on renewable resources like crops and on products like ethanol and biofuels.
With U.S. farmers now enjoying the best corn prices in two years amid worries about world crop failures, the plant is also a prime example of how demand for crops to replace petroleum-based products is not just enticing Wall Street but benefiting hard-hit rural economies.
It adds up to a billion dollar bet by Wall Street investors and profit-hungry industrial giants, led by Minneapolis-based agribusiness giant Cargill Inc.
In one end goes corn — 100 million bushels a year. Out of the other comes edible corn oil, livestock feeds and ethanol fuel but also a growing array of products fashioned from souped-up corn chemistry, such as industrial enzymes and biodegradable plastics.
“This whole notion of bio-based is that everything that can be made from a petroleum product can now be made from a plant,” said Alan Willits, president of Cargill Inc’s Corn Milling unit. “The technology is there to enable that.”
Willits, taking a reporter around for a rare inside look at the giant Blair corn processing complex, doesn’t hide his enthusiasm for the challenge of creating the bioeconomy.
“I’m pretty excited,” he says. “I think it is more viable to foresee that you are using agricultural-based products to compete in what was once strictly a petroleum market.”
“It is really an exciting thing for agriculture,” he said, noting that renewable raw material is a winning message for Cargill’s customers, a number of which have constructed plants on Cargill’s Blair complex — like spokes around a wheel.
Mike Lewis, an animal nutritionist at the plant and former professor of animal science at the University of Nebraska, said the Blair complex has “an almost endless capability to make new things ... We can literally take the components apart and put them back together in lots of different ways.”
The Blair complex is a giant computerized grid of chemical compounds being refined, remixed, refashioned. In total $1.2 billion has been invested by privately-held Cargill and other companies joining the biorenewable effort at the site.
It all starts with huge vats where millions of bushels of raw corn are steeped, the kernels softened and then “deconstructed.”
The outer part or hull of the kernel is removed, ending up as thousands of tons of animal feed. The seed tip is removed to produce thousands of tons of corn oil. But the chemical core is the carbohydrate rich, starchy bulk of the corn kernel — the raw material for fermentation and transformation into a sugary river Cargill and its customers call “the dextrose stream.”
Those customers — including industrial firms from Germany, the Netherlands and Denmark — have built facilities to plug into that biochemical river.
“It’s the first time we’ve done this — it was a big decision,” said Fred Reikowsky, general manager at the Blair plant for Novozymes, a Danish firm that invested $200 million to makes enzymes sold to corn and cellulosic ethanol makers.
“As the market expands and grows we can expand this facility,” he said. “If we fill out this plant, we will be by far the largest industrial enzyme facility in the world.”
Evonik, a German chemical company, uses the Cargill dextrose to make lysine sold on to the animal feed industry. Dutch-owned company Purac plugs into the dextrose stream to produce lactic acid for the food industry.
Also tapping in is Natureworks, owned by Cargill itself, which makes corn-based biodegradable plastics that end up on grocery shelves as trash bags or snack chip bags, as gift cards in Walmart and Target, as ITunes cards or plastic seals for Quaker Oats containers and parts of cell phones.
Cargill also produces high fructose corn syrup used in many foods and 200 million gallons of corn-based ethanol fuel at the complex each year.
Such products flow from Blair throughout the economy and the world. But the corn-based local economy has also gotten a huge boost, as hundreds of construction, transportation and plant jobs have been created and tax revenues boosted in nearby rural communities, supporting local schools and services.
The biggest boost has been to some 1,500 local farmers who grow corn within the 50-mile radius of Blair, feeding the plant’s daily needs for “yellow gold” from the fields.
The plant’s estimated annual demand translates to 100,000 truckloads of corn — or $450 million for local farmers at today’s corn price of $4.50 a bushel. That helps everyone.
Tim Gregerson, who with his father Larry farms 4,000 acres of corn and soybeans just 10 miles north of Blair, has been hauling corn to Blair since it opened 15 years ago.
Sitting in his home office with a flickering electronic price screen on his desk, Gregerson says Blair gives his family confidence about marketing everything he can grow.
“Diversity gives me piece of mind that the corn market is going to be there,” Gregerson said. “If sweetener and pop isn’t working, maybe ethanol is.”
Cargill’s corn buyers feel the same way, confident enough in their growers’ yields and quality to make deals months out.
“We contract a fair amount for forward delivery — with bids 18-24 months out,” said Jeff Hansen, merchandising manager for Cargill Corn Milling. “It’s a verbal contract that they make with us followed up by written paperwork.”
Every load of corn is checked to make sure no more than 10 percent of kernels are damaged, the moisture content is 25 percent or less, and tests no more than 10 parts per billion aflatoxin, a fungus-based carcinogen. U.S. Food and Drug Administration’s maximum allowance is 20 ppb aflatoxin in food.
“There is no leeway. The marketplace is aware that we have strict standards,” Hansen said. “All these products are dependent on it.”
Reporting by Christine Stebbins, Editing by Peter Bohan and Alden Bentley