EDMONTON Ñ Long gone are the days when the only product made from wheat was flour. A central Alberta grain processing company produces seven different products from wheat and plans to add more.
“When you’re a traditional mill, the product is flour. There is no further value-added,” said Greg Hemstad, vice-president of operations for Permolex, formerly API Processors in Red Deer.
“When competing with the large companies we have to do what it takes to compete, and for us, it’s value-added,” said Hemstad.
The wheat is broken down into flour, gluten and ethanol and from there, can be refined to develop more products.
Read Also
U.S. loses out on sales of soybean to China
U.S. soybean exporters risk missing out on billions of dollars worth of sales to China this year as trade talks drag on and buyers in the top oilseed importer lock in cargoes from Brazil.
From flour production, the company produces specialized bakery flour for fast food buns, livestock feed and gluten flour. The gluten is processed to vital wheat gluten for the baking industry. The starch slurry byproduct of the gluten is then sent to the ethanol plant to produce ethanol fuel and liquid livestock feed.
“The byproducts of each manufacturing step becomes feedstock for the next manufacturing step to continue the value-added process,” Hemstad told producers at the FarmTech 2005 conference held here Jan 26 -28.
“The amount of waste we as processors had in the past is coming to an end.”
Permolex buys 100,000 tonnes of CPS red wheat a year. It is a high yielding wheat that works in flour mills and ethanol plants. It also buys some hard red spring wheat, winter wheat, high starch wheat and barley.
“We want the protein for the gluten plant and the starch for the ethanol plant,” he said.
The company uses about 260 tonnes a day, or about 95,000 tonnes of wheat a year. Most of it is bought from central Alberta farmers, but Hemstad said the mill buys about 2,000 tonnes of wheat from the Peace River area each month to spread out risk.
About 30 percent of the wheat is purchased from the Canadian Wheat Board, mostly used for flour production. The rest is bought off-board.
The high quality, top grade flour produced from the wheat is skimmed for bread flour. The limitation of CPS wheat is its protein, one of the most important factors for the company.
Gluten, the protein part of the grain that gives bread its elasticity and rising properties, is the biggest revenue generator for the company. Gluten is worth 10 times the same amount of flour, he said.
When the Atkins diet craze was at its peak, the company couldn’t produce enough vital wheat gluten, the protein dieters use when they eliminated carbohydrates from their diet.
The company also has a cogeneration power facility that produces three and a half megawatts of power for use in the facility.
The vital wheat gluten slurry is used in the ethanol part of the plant. The goal is to produce 80,000-90,000 litres of pure alcohol per day from the plant. A 10 percent addition of fuel grade ethanol to gasoline reduces emissions from vehicles by 30 percent.
Hemstad said for Permolex to stay competitive with larger companies, it has to keep adding value-added operations. In the future the company hopes to strip carbon dioxide from the process and create a new feed product.
Part of Hemstad’s job in the past 15 months, when the new owners bought the fractionation plant from the receiver Oct. 1, 2003, has been reselling the company to customers and farmers.
“We have to prove ourselves that we would deliver and pay the producers for our wheat,” he said.
Hemstad said the original company, owned 95 percent by the Edmonton Pipe Industry Pension Trust Fund, was hobbled by strict pension ownership regulations and a $20 million cost overrun on the original project.
“We don’t have the debt load they had and we have more flexibility than the old owner had.”
Hemstad said Permolex also has the benefit of lower grain prices and higher ethanol prices. The biggest barrier to expanding the business is finding money to expand, he said.
“Securing capital in the agriculture industry is extremely tough. If we had a well sitting on our land, we’d have capital tomorrow.”
