PURPOSE:
Energy Grains, LLC was established to create an integrated input & output supply chain that provides a unique strategic competitive marketplace advantage for an ethanol plant.

OBJECTIVES:

1. To create a consistent, low-cost source of grain inputs for participating plants establishing a “first call” on corn acres.
2. To establish a producer alliance, which offsets expenses and provides an economic incentive to create a long-term partnership.

Energy Grains, LLC began as the vision of President, Paul Kenney in 2002. His vision began with the premise that an ethanol plant can be more profitable to its owners, and at the same time allow area producers to capture additional profitability for their grain, by eliminating the middlemen from the grain procurement function of ethanol production. The entity received a USDA Value-Added Grant in 2003 to support its research and development efforts.

The concept is simple, yet powerful: Ethanol plants that rely solely upon retail grain sources for grains will have to expend a higher net cost per bushel of corn than those that have direct access to on-the-farm grain supplies. Energy Grains, with direct access to area corn producers and other sources of grain, will eliminate most of the cost associated with the middlemen retail grain sources because it can obtain and supply the grain at a lower cost margin, to the benefit of both the plant and the farmers.

Energy Grains Advantages:

To an Ethanol Plant:

a. By sourcing a larger portion of grain directly from producers, the plant will operate with a lower competitive input cost structure.
b. The creation of a “closed loop”, integrated supply chain will allow an ethanol company to influence acres and hybrids of corn production on behalf of the plant.
c. The plant will obtain an ability to establish a virtual storage function that can support its margin and risk mitigation strategies.

To a Producer:

a. Sharing of income from the procurement function will create unique producer loyalty. Alliances with producers will help generate a positive image within the farm community.
b. The relationship with Energy Grains capitalizes upon existing farmer-to-farmer sales channels to create an extended marketing reach.
c. The creation of an electronic communication channel with producers allows the plant to exploit marketplace margin opportunities that may be short-lived. This tool will be used to communicate contracts opportunities, input sales opportunities, and participation requirements to the supply chain participants.