Pellet production leads to Poet's expansion
Poet's investment in its Mitchell plant struck gold Wednesday. The company ceremonially broke ground on about $5 million in upgrades to expand equipment on site, including its Dakota Gold pellet business, which uses the distillers grains produced...
Poet's investment in its Mitchell plant struck gold Wednesday.
The company ceremonially broke ground on about $5 million in upgrades to expand equipment on site, including its Dakota Gold pellet business, which uses the distillers grains produced in the process of making ethanol and forms it into pellets that can be consumed easily by animals.
The upgrades in Mitchell are the first of their kind for the company, Poet Vice President of Business Development Matt Reiners said.
"I think for us, the biggest piece and why we wanted to focus here is providing options for our local folks, our local producers of both beef and bison," he said. "We've changed the shape and form in a way that our local guys can actually use and have value for, which is a big change from what we have today."
The U.S. Grains Council says exports of distillers dried grains with solubles, or DDGS, have exploded from 1 million tons in 2006 to 11 million tons during a 12-month period in 2016-17. But Poet's pellets are where the company has tried to differentiate itself.
Poet is marketing its product as "Dakota Gold ProPellets," arguing its product is more digestible, easier to handle and has a lower ration cost and a lower shrink, meaning less product will be blown away or damaged while being marketed. Reiners specifically noted that South Dakota's windy weather can sometimes be a problem with traditional distillers grains.
"That pellet product doesn't really have that same concern because it's densified," he said. "We take it and we stuff it tight into a little-bitty tube, and we're able to affect that bulk density to the point where the weather conditions aren't as much of an impact."
The construction at the facility in northern Davison County near Loomis will include a 20-by-40 foot building for the pellet mill and four small bins to hold the pellets. Plans also call for an additional fermentor and an extension of the existing fermentor building on the property, as well. Reiners said the project should be finished around Labor Day.
Poet Mitchell General Manager Becky Pitz said the growth in Poet's pellet business only made sense, considering ethanol is one-third of what of the business has for products, alongside corn oil and distillers grains.
"We're a biorefinery, so for every bushel of corn that comes in, it gets divided into three items equally. The protein, the fiber and the fat, those are highly nutritious items that are very valuable ... that's just as important to what we do."
Company representatives said the pellets will provide an alternative to the dry, loose meal option Poet has sold previously, because the pellets can be more easily transported into a pasture, for example.
Gregg Koerner, a merchandising manager for Poet, said the product remains in the infancy stage from a marketing standpoint. But the new product is exciting, he said, because it will expand the company's ability to market to other areas west of Mitchell, primarily cow/calf operations and ranches that could use the pellets.
"It's good for the Mitchell plant, and Mitchell has a good footprint already going west, going to the Chamberlain area and to the (Missouri) River," he said. "This will probably let us go further west, yet."
But considering Poet already has more than 20 sites around the Midwest, Mitchell made sense because of its connections to farmers in the surrounding area, Reiners said. He added the company has "tinkered" with pellet products since the Mitchell plant opened in 2006, but market conditions didn't support it previously.
"As markets have changed and as feeder habits have changed, this has become a really good product for us and a good investment into the plant," Reiners said.
The choice for Poet to expand Mitchell's plant operations is an affirmation of the hard work done by local employees every day, Pitz said.
"I always tell our team they're the best and this is proof of that," she said.