Green Plains Inc. (GPRE) Earnings Call Transcript & Summary

Welcome back to FQ Talks, the biweekly webinar series by Fluid Quip Technologies. This is Keith Jakel, sales and marketing manager with FQT, excited to be hosting this week. Well, with the new show sponsorship from Green Plains and Ospraie, we had a little extra coin to create the nice intro video. Thanks, guys. Don't worry, for the 50% of you that tune in just to hear the song choice. We kept the music and now feature a special chosen song at the end of each show. Stay tuned for this week's selection. So FQ talks. It's all about each week, bringing you talk and help -- designed to help support the industry with education, knowledge and a sharing of new ideas. You can catch the previous shows on our website at fluid quip technologies.com/fq talks and don't forget, follow us on LinkedIn, Facebook and Twitter, where we announce the coming weeks show on Monday afternoons. Remember, we are now biweekly on the second and fourth Thursday of the month. We do appreciate hearing from you and your participation. You are making this a great exchange of ideas, and you continue to challenge us to bring more topics to help the industry in discovering and obtaining more solutions for their biorefineries. Remember, you can participate in this webinar by clicking the Q&A button to put your questions and post them to the panelists. We do ask that you do use the Q&A button so that everyone can see the questions as they're asked and it gets recorded as well. So this week, like I said, we're excited. We're marking our 38th show. And as I referred to in the opening, we are focusing on the exciting news of the new ownership interest that Green Plains at Ospraie has taken in our little show. Well, I mean, actually the FQT brand. But the show did come with it. Today, we have 2 men that everyone wants to hear from. Today's guests are Todd Becker, President and CEO, Green Plains; Dwight Anderson, managing partner for Ospraie Management; and Michael Franko will be moderating this week's show. Welcome, gentlemen.

Thank you very much.

Thanks, Keith.

Thanks, Keith. With that, I might kick it off. As Keith said, we're really excited to have you guys, Todd and Dwight, thanks for joining us. I know we got a lot of things we want to hear about from you and a lot of things I know you guys are excited to share about. I think probably the first piece and maybe because it's personal for me and our Fluid Quip Technologies company. But I think having a better understanding for folks out there that maybe aren't as familiar with us or familiar, inside our industry, with Ospraie and Group, why FQT? Why the decision to move in this route from your guys' side from a asset management leadership group and also Green Plains in the biofuel space? Why did we go this route? Why are you excited about the partnership with Fluid Quip technologies?

Todd, do you want to lead off?

Sure, Dwight. Thanks. So we've known the Fluid Quip guys for quite a long time. We've been following their progress on their technology development along multiple different fronts, all of the different IP and portfolio technologies that they possess. And we continue to say that that's going to be a very important part of the future of biofuels, the biorefinery and our industry. And so we got involved a few years back in looking at deploying some of those technologies, especially around what we call Green Plains 2.0 in protein, oil and sugar. And in those discussions, we knew we were going to deploy this across our platform, and we thought it would be a great investment opportunity as well. Because we -- it's not just a Green Plains technology, how we think about it. We hope everybody in the industry would go as far as we can with this because we think it's transformational as well. And so the transformational technology that Fluid Quip exists, we wanted to make sure they were healthy, they were well funded and they can continue to innovate on behalf of the industry. And we really -- we're putting our money where our mouth is by deploying this at all of our plants. So it was really a function of making sure that, obviously, this is a strong, robust company, and I called Dwight a year ago or so ago and said, "Hey, let's -- let me show you something pretty interesting." And that's how I think he started to look at it as well, and it's a very exciting opportunity, but I think it's very exciting for the industry. I don't think we've possessed a moment in time where there's a technology that can truly transform what we do and as a whole industry and the importance of having this deployed with redundant operations across the industry.

Mike, I'm going to give you a little bit more background about ourselves. Since as a private company, we're probably not as well-known and ourselves in that. We've been around for almost 22 years, but I was involved in investing in agricultural prior to that. So going on 27 years of involvement in investment in agriculture. We have made a material commitment to the agricultural space over the years, helping to build up 2 of the biggest farming companies in the world as well as having acquired the grain distribution and logistics assets of Conagra, which we renamed into the Spanish word for Ospraie, which is Gavilon, which later we sold to Marubeni. And over the past few years, we've made a real commitment with our own internal partners' capital into the agricultural technology space. The aggregate market cap of the companies in the space where we have governance controls or involvement with is over $1 billion. And so with our focus in agricultural and especially the ag-tech side, the real focus -- we use an overall moniker, like how to do more with less. But the theme has been how do we meet the growing need for more and sustainably-produced food, especially protein. It has to be cleaner. ESG is a primary criteria, lower carbon, water, other inputs, especially pesticides. But it also has to be economically competitive, equal or lower cost for the consumers and customers. And so when we approach these companies and investments within those criteria, the first thing we always take a look for is management. And so we've had the good fortune of knowing the Green Plains team. We were involved when they went public and have known Todd and his team ever since. And then we're impressed with yourselves as we did the due diligence. And as Todd said, he introduced the idea to us a year ago, but he had talking to us about his idea and his concept of how to transform Green Plains and the industry and the wider ramifications for years before that. And he had discussed about how he had originally looked to try and change the risk-and-return profile for Green Plains by other incremental investments in other extra capital needed for cattle feeding or for vinegar where they were adjacencies where they had value added. But as you saw and developed and got to know yourselves better, the idea that with his core assets, he could dramatically change the sort of return and growth profile in end markets and do it on a more focused capital base, was an exciting idea for him and one that, that enthusiasm transmitted to us. And so as we got to know you, we also had the advantage of having something that the proof-of-concept was already there, whether it was for other competitors like [ Coke ] or Green Plains plants already utilizing the technology. It's something that really offered a great return for your customers. We knew it could work and saw the advantage and all sorts of ways and optionality of that business to grow. And what really attracted me and sort of sold me on that is, is we were involved as founding shareholders in Adecoagro, which has become one of the larger farming companies in South America. And we saw the benefit. We built 3 of the lowest cost, most efficient sugar mills in Brazil. And we have the ability to produce either sugar and/or ethanol and/or power. And so whatever the most expensive or most value-added calorie was, we could move and adjust our revenue stream. And so it gave just a much greater margin stable to the business. When we looked at yourselves, that aspect where you could do that in a multiple way, okay? You could change inputs or a plant could gear corn or sugar. So you have flexibility on your input, okay, and then is, forget only 3 outputs. The breadth of technologies that you guys have for these plants means you can produce many more different sort of outputs. And so that aspect for us to take part in an investment that we thought really helped meet some of the growing demands and needs for a protein for the industries, helps transform an entire segment for the different ethanol and sugar plants. It really gave tremendous economic benefit to your customers and is something that has all sorts of ways which we can grow this investment to really add value to those different industries and segments. That addressable market could grow. That's what really excited us. And sorry for being so long winded.

No, I think that helps. And that aspect of when you look at Ospraie Ag Science and I get excited about that group of companies in there, really, you see that mission from farm all the way down to growth, nutrients for the actual farming piece and sustainability, all the way through to the final human food consumption piece of things, which I think you've discussed in the past, how much you see this protein place in on top of there. And I don't want to belabor the protein point too much. But it sounds like that's a focus for you guys. When you look at the world market, do you have any fear of the lack of demand in protein or that piece like the horizon on why that long on protein?

So Michael, the answer is, look, we respect the competence and brilliance of scientists and engineers to be able to innovate, okay? So will I say that I have absolutely 0 fear? No, okay? Is it an expectation that anywhere in the near future, given the rising wealth for the total world over time, given the growing protein needs. And especially segments as you take a look at how China is commercializing and corporatizing their feed industry and their meat industry; how aquaculture has to grow and fish meal production, there's some concern over sustainability there. But no matter what, the ability to support aquaculture in all of Asia, India, especially, which is not going to go for beef, okay? This is an area where we worry more about there being a gap of supply not being able to meet demand in the near-term more, much more than we worry about an aspect of there being too much supply relative to demand. Todd, you looked at this in a tremendous extent. Do you want to talk about it?

Yes. I mean when you look at historically, what's been going on in protein over the last 10 or 20 years, it continues to outpace everybody's expectation on demand growth every single year. And this is another record year of growth in protein demand in the world. And what's interesting is if the whole industry would apply this technology, it's less than 1 year of growth in protein on average over the last 20 years. And so the demand -- we believe the demand will remain on that path. We'll obviously -- things like COVID and the financial crisis, those were bumps in the road, but it didn't stop the growth. And the protein demand, even in 2020 and 2021, we continue to see acceleration there. So there's going to be more and more limited supplies as well as you're seeing, even potentially playing out this year, where the products that are going to be produced out of an ethanol plant, especially the higher-value products, are going to be more and more in demand. And start to demand even a bigger share of the calorie as well and what's fed to animals and people around the world. So absolutely, 100% agree. It's what we're investing a lot of money behind and supporting the opportunity as well. But between all of everything that we're doing from an industry standpoint, it's nice to have a demand that is growing and is pulling than a demand that is static and we're a bit oversupplied. So this is a very exciting opportunity. And I think it definitely cements that these plants should be running. They should be grinding corn in the United States. It's a very important part of agriculture. I think it's the backbone of U.S. agriculture. And I think this is just another ability of this industry to play a very important role in U.S. agricultural policy.

While we're talking about that growth in the market a little bit, do either of you want to speak to what you hear very often on, we need to get more plant-based proteins into these diets? But when you look at that demand curve, especially like fish space and the shortage of fishmeal, that you look at -- at least I hear a lot about, we got to fill this protein demand from plant-based proteins, not so much left-over animal feeds. They're kind of back into this clean aspect of being able to provide clean, sustainable feeds that aren't coming from other animal byproducts, but from plant-based sources.

Yes. I'll take that one to start, and I'll let Dwight expand on that. But feeding animals to animals is something that I think the consumer -- while we're not going to get away from it, it's probably something that a consumer, or is something the consumer is definitely concerned about it and wants to have cleaner and better diets. And this is one of the sources that can help do that. We're already seeing it in the poultry sector. That's basically feeding the all-veg chicken. And so not treating any kind of animal to an animal. So when you sell it to the consumer, they know they're buying all vegetable diet or all-natural diet. So it doesn't always have to be around kind of next-generation meats or those type of things. It's also around the quality of diet that you're feeding the animal as well. So it's not just all around plant-based foods. But we're going to play a role there as well, whether it's going to be food-grade or feed-grade. I think everything that Fluid Quip is doing in the IP portfolio and the technologies that an ethanol plant can buy today are all going to be around that thesis as well.

Yes. Michael, I mean, this is, unfortunately, for me, a case of do as I say, not as I do, as a committed meat consumer. But -- and also a committed red meat consumer. But when we actually take a look and we forecast forward sort of where demographics are going to go, where per capita protein consumption is going to go and what's going to be driving it in which segments of the world. So if you -- remember when I spoke about one of the keys and critical criteria for us to invest is cleaner in multiple levels, both in terms of input and output. And so your technology in the aspect of what you're doing, what quality of feed you create and the breadth of markets it can support, in our line plays fully into the aspect of the area that's growing. But also for your customers, is we do worry about the outlook for the second half of this decade for transportation fuels and calories. And the aggregate of your portfolio, not just the protein side, the potential in terms of evolution on the ethanol to clean sugar and the like and how that can support the market. It gives incremental areas to use the existing capacity and give hope and growth to the segment as a total solution.

No, those are good points on that area. And I guess, bringing up the one other big question that comes about when you talk about plant-based proteins, right, soybeans. What do you guys see as the play in what the protein that's coming out of the Fluid Quip's system, this type of product in comparison to people just planting more and more soybeans around the world. And maybe both are going to grow, but do you see a differentiation in those types of products? And what is able to be offered by the industry compared to just more soybeans in the ground?

Well, the answer is a few different levels. One is especially in the United States. We've tested, and there's a friend Adam Lowry, who's created Ripple milk, okay, pea-based mill. And for them, actually, they did the math and actually soy would have been more economic, but consumers don't want soymilk, okay? There's a horrible negative connotation. There are some tests that tie in a bit to that. So the aspect, just purely in terms of the pull side, in terms of customer perception, regardless of science, whatever else, is something that's much stronger. And then you take a look at the breadth of products that can come in aggregate out of corn. It also, to my mind, creates many more different sort of optionality of revenue and product streams. So soy is going to be part of the solution, especially on some of the pulls you're getting it from renewables for oil. But in the aggregate, relative to the breadth and variety you can get out of corn and the consumer perception, to my mind, that's going to be the product of choice and is actually the pull that we've seen in talking and looking at the market. Todd?

Yes. I think I take a little different view but not an argument. It's just a different view that when you take a look at soy, and I'll give you just 2 examples that I think are really important for why we deploy Fluid Quip technology globally and not just in the United States is, number one, you're seeing the anti-soy movement in aquaculture, especially in Norway and those countries. And it's really anti-soy because of the -- what's going on down, obviously, in where we grow it. And so -- but what's important is that we also have Brazilian customers at Fluid Quip, who deploy this technology. And the great thing about it is if you deploy the protein technology in Brazil using non-GMO corn, you now have a non-GMO protein that's in deep demand globally in aquaculture. And that is a huge opportunity for the customers that deploy this technology in South America, unlike what we have today, which is harder to get into Norway today. But I even think some of that might be changing on the non-GMO front. But when you look at that, that's number one in the impact relative to kind of soy proteins. And then if you look even in aquaculture and go a little bit further, you can make the case, and we've had nutritionists make the case that MSC proteins produced in the Fluid Quip system, whether here or anywhere around the world is the perfect aquafeed. So we have been told that. It doesn't have the anti-soy nutritional characteristics that they've been dealing with over the years in feeding fish around the world. And when you look at the conversion of feed to meat, it's the most efficient conversion machine that exists in the world is aquaculture. It's 1 to 1.3 pounds, per 1 pound of meat or 1 pound of food that you make, and it's extremely efficient. So when you kind of combine all those things that were approaching aquaculture and using this as a delivery mechanism. But even more importantly than that, when you look at soy meal, and don't get me wrong, we all wish we were soy crushers these days because the economics are excellent. But there's been no innovation around soybean meal in the last 40 years. It's still 47 pro and 46 pro, whatever it is. Where your product or the product that your customers can make out of the Fluid Quip system, there's innovation there. It's 25% yeast. Yeasts can be manipulated. They can be developed. They can be -- there's lots of innovation around yeast that's coming out of this product. And I think that's the thing that doesn't get talked about much is while we're going to make 50 pro, 52 pro, 54 pro and move up the curve, we also have a yeast component that is very different than other products that have come out, whether corn proteins or soy proteins. So when you combine all of those, I still would love to be a soy crusher these days, but I'm really excited about the opportunity that exists around what we're doing because that has been a demand pull market for protein for the last 20 years if you're crushing a soybean. We have not been able to benefit from that because we make a 30% protein distillers grains or plus or minus. And now we, as an industry, have the opportunity to get that demand pull and get us some benefit of that as well. And then on top of that, you add in there distillers corn oil. And it almost like you're going to transition from a couple of fuel products into now much more like a -- enjoy the economics and the demand pull of a soybean crushing facility. But with a more innovative and we believe a better protein product because of the yeast component as well.

Yes. While you're talking a little bit on that development, do you want to share a little bit about Optimal Aqua? And what you guys are doing yourselves in the aqua space and benefits you see of the product into there? I think it's pretty exciting, some of the development work that Green Plains is doing there.

Yes. We've been out front with anybody that wants to come see it, whether a customer or potential customer of Fluid Quip or of the product anywhere globally. What we thought was really important is that we needed to show the customer that this is the perfect aquafeed. And if you come to Shenandoah, you don't just see the MSC protein system, you also see a world-class, world-scale aquaculture laboratory where we're actually developing aqua diets using this product for customers around the world. And so they can come to Shenandoah. And they see it right there in action, us growing fish using this product and innovating around this product as well. And so we do a lot of testing and a lot of sampling for a lot of our customers as well. And then we develop our own innovation diets as well. So Optimal is very important to that. It is a -- started out as a company that was doing mainly retail type feeds to trophy Pond -- trophy fish. The weekend fisherman who has dug a hole and feeds his fish in the pond, but has really transformed itself now through this product to be able to go deeper and deeper into global aquaculture. And you're starting to see the oceans come Inland. And when the oceans come inland, they're coming all the way to Iowa. And they're coming all the way in Nebraska. They're coming all the way to Tennessee. And so we're going to grow a lot more fish inland, and they need a solution -- a feed solution as well and something that they can really start to get better benefits by doing this. And the economics continue to get better and better. So we're going to be a partner with anybody that's going to be in aquaculture around the world, and I think it's going to be using what we call the perfect aquafeed, the perfect delivery mechanism, which is the MSC protein. And again, Green Plains can never supply all that, and we need redundancies. And we can talk a little bit about that later, but redundancy in that market is extremely important. Because once you're in the diet, you can't get out of the diet. You cannot let down an aquaculture company or a pet food company or anybody like that as well. So a very important component and a lot of growth around it. And I know Dwight has some opinions on that as well.

In terms of aquaculture, the trend in the demand and everything forward is fine for us in terms of that, Michael. In other words our investments in yourselves. And so Todd, having taken the risk and put the investment in to show that the feed that comes out of the Fluid Quip equipment and an able plant is something that is beneficial and superior for the fish as we've demonstrated in the test there is what gave us comfort in your technology. So when we sat down and talked about a vision for Fluid Quip, what the addressable market is, what its economics for its customers are, having Todd as a customer, both directly, but also downstream, to prove that, is what gave us comfort really in the potential for yourselves.

Yes. I appreciate that. And I certainly will vouch for Todd's comment, it's really exciting to go to Shen and be able to watch that product. You see corn coming in, in a truck in one end, and you see fish in the tank and talk to Dr. [ Billentine ] there at Optimal Aqua. It's just really impressive to see the proof is in the fish in the end with what they're doing there. It's really -- it's a really excellent campus to get to see that from kind of soup to nuts.

And just even the visual when you visited, Michael, if you remember, we were both splashed because of the way in which the fish actually went for the feed. So it's that aspect of the way in which they actually like it and take it versus necessitated feeding. We physically felt that actually happening and occurring when we were in Shenandoah doing our due diligence with yourself.

Yes, they seemed pretty excited. A couple of questions came in. One, I might just -- a couple of clarification points. Todd mentioned MSC protein. So the Fluid Quip process is called Maximize Stillage Coproducts, that's MSC. So that's the system that goes in the ethanol plant. The protein is what comes out of that process. And there was also a question about soy proteins. Our system does not operate on soy. We are only operating on corn currently. We actually have operated some on some sorghum, but more green based. It doesn't really work in the soybean space. We haven't been operating in that space. It's just kind of an adjacent point. But a question came up, and I'm curious to hear your guys' thoughts on. Todd, you mentioned the excitement about genetically modifying the yeast and we can express some unique things. It's an easy tool to work with to bring special components, certain aminos into the feed product. Are there concerns about impacting the integrity of the protein by modifying that yeast in that way? Is there a concern from -- we talked about it being clean, that now we're playing with that yeast and it's expressing in different ways and a backlash from that?

No, I don't think so. I mean, I think it's happening already today. Look, synthetic biology and other areas are already doing these type of things. You can bring a very interesting product to market very fast. And that's part of the innovation around our work with Novozymes and the yeast, which is, are there characteristics, are there amino acid characteristics, are there things that we can basically design in the yeast, which is part of the ultra-high protein? We call it ultra-high protein coming out of the MSC system for clarity as well. We're not branding the protein because that's not from -- from our standpoint, that's not really where we had headed down the road. But when you think about it, you want the fish that you guys have seen in Shenandoah go after that and be aggressive, and want to -- basically around palatability and other things. You want the species to be very, very happy when they eat it. And you almost want to trick them into thinking they're eating other things. Like, for example, you can actually design this product to trick the fish to think they're eating fish meal, and that's done through innovation around yeast. And those are things that we're doing. In our pet customers, if you need a specific amino -- or our dairy customers, for example. Don't give the amino acid that's readily available. Design the yeast with amino acid. Design the product to include amino acids that aren't readily available, but also maybe increase milk supply or protein levels and fat levels. So all of those things are happening around the base of this product. And that's the innovation. That's what's so exciting about what the protein products that we're producing and this industry can produce, is that don't just think about we're going to make 48% or 49% or 50% protein. And you can make -- and don't worry, the returns are there for that as well. I mean you're getting the values you want to sell the product at those levels. But then take it 1 step further is that what's next, what moves this industry even further that causes this technology to really change the economics of the industry as well. And those are things like we're talking around, around. Because of the 25% yeast product, the 25% yeast availability in the protein that is produced out of your systems is -- has a lot of value and a lot of innovation.

Michael, on that point, you talk about tricking the consumer, to use Todd's words. That aspect of when -- there was an interesting study done for Impossible Foods customers, the actual people who've purchased and used Impossible Foods. And the majority of them were against GMO products and against consuming them, okay? The way Impossible Foods makes their product, okay, is they actually splice the soy leghemoglobin, okay, genetically engineered protein, they splice that DNA into the yeast, okay? And so that whole consumer base is actually eating something that is tied into the genetic modification of the soy into yeast, okay? And so a good amount of it is really just going to be the aspect of presentation, education. And in reality, just some aspect of subjective perception, okay? And so the concern isn't really the aspect of what it does or negatively modifying it. It's just making sure the consumers don't develop a wrongful perception. And Impossible Foods has been genius at not highlighting that.

It's a very good point. I've heard people talking. One conversation quickly to the next on the 2 opposing points of how much they love it and also how they're so anti-GMO. It's like -- it's an interesting piece. And you're right, it's about communication and perception out there. Well, another topic area that we have on here is sugar, and I know we've spent a lot on protein, and we like to talk about that protein piece. But part of the portfolio -- and I know, Dwight, you've mentioned it too a lot about kind of the IP that FQT has and the development work we've had and the significance there. Can you share what you guys see and what you got excited? I mean, I guess the first time Todd picked up the phone and said, Dwight, I got this group, they look pretty exciting. Talking protein but then saying, "Hey, some of the sugar renewable chemical space," what got you excited or interested in that sugar side of the opportunity?

Well, the answer is, is the opening conversation with Todd going back a year was actually more protein-focused, okay? But for that to be the stream alone and that probably wouldn't have been enough for us to commit to join in with this investment. It's the breadth of markets which your products can help upgrade the streams to. And so you take a look at the size and scale of the industrial or clean sugar market and how that has had -- we talked about the structural growth for fish, okay? When you've had no growth in the wild crop that you've had, that's the highest growth rate in total for the world per capita for protein is going to be fish, holy cow. The structural, sustainable, non-economically sensitive growth for industrial and clean sugar and how you need a diversification of supply sources for that in incremental supply to make it affordable and actually make incremental growth possible. When we actually understood that not only for the existing operating plants is your technology working and able to upgrade for that higher level of protein to work and be suitable for other markets. You also have the incremental technology that'll upgrade the flow to actually create clean sugar and what that can do for the fermentation. We understand the scale of that market, the margins for that market and the potential growth and structural growth, non-economically sensitive or energy cyclical nature to the growth for that market. That aspect of what it could do for your customers and for the plant in an incremental aspect was something that that's really what got us over the hurdle to say, hey, this has got a good base rate return for you and your customers. But the incremental ways that your business can grow by going and tapping into that market for the plants was the thing that really was a convincing aspect that made this something from a logical and good investment to something that could be really exciting. And I know that this is actually a passion for Todd. So I'd rather hand over to him for that.

Yes. I mean, I agree. I think when we looked at Fluid Quip as a customer, what was really intriguing for me is the other parts of the technology portfolio. And we knew protein worked. I mean we saw it working already with some of the customers where you deployed the technology, which -- remember, we weren't the early adopter. We were the fast follower. And I think that's really important that you've had other customers that were the early adopters that took a lot -- took actually more risk than we did, whether it's in Wisconsin or in Nebraska as well. And so for us, though, it's the whole portfolio that's very interesting, not just for us but also for our industry again. And so when you look at Fluid Quip's sugar technology -- if you think about what we do as an industry, we make 5 or 6 or 7 different products. And quite frankly, it's not enough. And when you look at what a wet mill does, they make 200 different SKUs or 200 different products. And so, which of those products can we go and use your technology to exploit our ability to process lots and lots of corn really cheaply. And one of those was your CST or your clean sugar technology, where we can now have a dry mill, produce glucose or dextrose or sugar and not -- and potentially not even make ethanol anymore. And to us, we always -- I always knew in this industry, not just Green Plains. So I mean I'm not just talking Green Plains. But think about all the fermentation capacity we have. Think about all the scale and processing we have. I mean, we are -- it's a beast of an industry. And when you look at the portfolio that you have, we can get -- we can go after more products not just Green Plains, but as an industry to make a lot more money that's in need. And sugar was one of them. And if you look at what's going on, whether it's in green chemicals, bioplastics, synthetic biology. All those things are going to take more and more glucose and dextrose to make that happen. A lot of food innovation is going to take a lot more of these sugars to make those things happen, and chemicals as well. And these are insatiable markets on their own. But they've been limited by growth because they're limited by inputs. And so what's very easy is for a dry milk to make a lot of -- potentially make a lot of these products, and that's what we wanted to also bring -- help bring Fluid Quip, and Dwight as well, help bring Fluid Quip the financial strength to go and continue to innovate around these products because it's still a small company. But we wanted to give Fluid Quip the ability to really go out and exploit their knowledge base, their long history in wet milling and what they've done and the knowledge and then bring that back into the industry and go after all of these markets. And that's a huge opportunity for us. I mean, in the next 10 years, our view is that demand for dextrose and sugars are going to double from plants like ours. And supply will not double unless we do it here in our industry.

That's a point, Michael. We did a range of outcomes. We said, we're not sure whether the growth is going to be 7 billion, 10 billion, 12 billion, 14 billion pounds, okay? But it's going to grow. But actually the constraint is as much price and availability rather than the end markets. And so one of the things we always take a look for is that addressable market, the size of what it's going to be. Is there a pull for it? And so that aspect for your customers, where there is some question over the terminal value for some of their existing products to be able to transform it to an area where there is such a gap, great availability, just short of supply, we think, would actually increase that level of demand. And so we spent a lot of time talking about high protein. But that aspect of what the clean sugar could do in terms of for your customers and the scale and sustainability of what that end market could be is something that gave us really great comfort that the investments themselves in your equipment wouldn't destroy the profitability end market. It would actually potentially create incremental demand here.

Yes. No, I get to talk to a lot of the cutting-edge science people working in those spaces. And it's super exciting to realize -- very often at those conferences, I like a joke that I'm the dumbest guy in the room. All I do is get you some sugar. But the things that people are doing with their sugars and then come to realization, how many of the developments from major players, big names behind them that are based on fermentation. The fermentation processes that need a carbohydrate, they've got, I call it a bug of some sort, very fancy bug that is able to convert those carbohydrates into growing what we need. If anywhere from human food, like in Impossible Foods, all the way over to products and plastics like you mentioned, Todd, that are on that renewable scale. Todd, you talk about the growth in the need for that dextrose, do you see that across the board? Or is there 1 segment of those that you say this is going to take off first and be a real need right away and then other stuff will catch up? Or where do you see that growth?

Yes. I was shocked -- well, I think it's across the board because I was shocked and surprised to see that Fluid Quip, long before Dwight and I appeared on the scene, has over 200 different initiatives in multiple different industries, whether it's through food, through renewable chemicals or others. And it was impressive not only to us, but I think to Dwight. And I think that's the important part of it is that this spreads across so many different opportunities that haven't even been started yet. And it goes all the way to synthetic biology, which is really where the future. If you just look it up and look what's going on in the innovation, it's all driven by dextro, glucose and fermentation. And synthetic biology is really this massive upscale opportunity for what we're doing. And so long before we appeared, Fluid Quip has been innovating here, and we just wanted to provide the fuel for growth there. And the benefit is going to come -- really going to come right to the Fluid Quip customer that's deploying their technologies. And the great thing is it's -- there's a lot of really good IP around it as well that Fluid Quip has put in place. So while it's certainly -- people have been making sugar for a very, very long time or dextrose, this is just another way to get there, and it's another way to get there through a dry mill, and that's very exciting for us. And I'm amazed by the customer list, truly, how broad it is, but how big -- the depth of the names that are on this list that are really looking at using your product to grow their products.

Yes. And that's where I get to hear exciting ideas. But when you look at market space, I know you guys have a much better exposure to where that's going. But what we hear, and I can end up in that echo chamber, is just crazy growth in that space and a lack of the wet mill today to be able to supply what they need. So I think to this industry, a huge opportunity across the industry to help step up and fill that gap to help develop that, clean products in the future. Todd, in that vein a little bit, we have up here the York Innovation Center. I think that when we started sharing the news with a lot of our partners out there, it was one of the first things we liked to talk about that we were really excited about, as being a technology company, but not necessarily having our own plants, but looking at being able to collaborate in more tangible ways. Can you share a little more about thoughts and plans for the York Innovation Center?

Yes. As I say to people, and people that know our -- some of our transactions. We bought Madison and Mount Vernon and we got York. Now we say to people, we bought York and we got Madison and Mount Vernon because the amazing campus that exists there. Number one, from a unicorn plant on quality around, now, USP grade alcohols, which is fully upgraded and fully transitioned through a big capital investment we made in a real USP plant operating. That's operating today and in some consumer products that we all use on these phone calls. But beyond that, sitting on that site was an -- $70 million or $80 million spend on an innovation center that was there when we got there. And it's a full-scale pilot facility that really was the backbone of cellulosic work in the last 10 years. And so we weren't focused on that. But then when we got in there, we saw the fermentation capabilities, the separation capabilities, all the capabilities that can do, inclusive of can Fluid Quip use this innovation center to retrofit it and make kind of what we would say is a large-scale clean sugar facility that can be easily replicated now at the larger plants. And that's where we're going with this right now. So we've done our work in algae there. We've done scale-up for propionic acid opportunities, natural propionic acid there with some customers that wanted to use our facility for that. We've done work around next-generation yeast there as well. And so all of those things all provide a benefit for the Fluid Quip customer. Because between what we're doing in our Shenandoah Aqua Lab, and now what we're doing in our York Innovation Center, all of those things are trying to make good products that we make more and more valuable. And so luckily, we backed into getting this on one of our campuses. And luckily, we have scientists there now that are exploiting that opportunity and accelerating way faster than you can accelerate many technologies because of the fermentation capability and the other capability that's there. So what's great is very soon, within, hopefully, weeks, we'll be cranking out our first batches of CST or clean sugar, out of that facility and thinking about where are we going to go next within our system to make more and more of this because the customer demand is there. But we've already made some there in small scale before we did the full retrofit. So we know it can do that. But now we're -- while we say it's small scale, it's actually not small scale relative to -- there hasn't really been any innovation around dextrose and glucose production in the United States for a very long time. And this is step one for our industry.

Yes, I appreciate that. And as I mentioned, that's a big piece. And I like the way you phrased that to the Fluid Quip customer. Because a lot of questions have come up on is this just for Green Plains now too, and your focus on what we can do for the broader industry. While I have the second, and we've got you that you can say it, who do you see as the Fluid Quip customer going forward?

Well, it's global. And I think there's no way Dwight would have partnered on this opportunity or invested alongside. I mean he could talk -- he can say it himself. If it was just Green Plains as a customer, I don't think that's the -- that's not the strategy here. But you have customers in Europe, Canada, South America, China, U.S., it's the global Fluid Quip customer. We just happen to have 1 system built, 2 more under construction and a couple more on their development at this point, and we're going to build them across our whole system. But we're certainly not going to be the only way that Fluid Quip growth and increasing technological advancements are going to take place just through our own system. Because if our whole system produces protein, the ultra-high protein, we'll make 700,000 or 800,000 tons of protein in a 12 million-ton a year growing market. So we're not even going to make a dent in the demand growth in 1 year if Green Plains applies it across their whole system. And if the whole industry applies it, we still won't make a dent in 1 year of demand growth. So it's -- we're just a customer, and that's how we look at it. And our goal is to help your customers or help your potential customers come to Shenandoah and see what's there. We're an open book, come on. And you could even train at our plants as well. That's the great thing, too, is that when we started up or even your earlier customers started up, it was a lot of trying to get there kind of stuff. So -- and now our plant number 2 will start up way better than plant number one. So I just think it's a benefit to really the whole global customer base of Fluid Quip to have this partnership.

Wonderful.

So, Michael, to echo, but say it in a very different form and from a different perspective, is we would never have invested in yourselves in capital and support that we did if the only end customer was Green Plains. But also, we would never have invested with you if we didn't have Green Plains as a partner, okay? It's a rare, unique combination in terms of having not just a management team and a company that you trust in respect and have done things for more than a decade. But the aspect that is to create the alignment, to create the incentive for them to spend the money to develop and invest to show that your products work, to work with it. So that actually is we at Fluid Quip can actually say, hey, let's take you to a customer. And Green Plains is the sites, the assets, the people, the investment to actually develop all the different outputs that will come out of the Fluid Quip equipment. And so to have that unique aspect of a customer, a partner and someone who is actually working to actually show and prove and monetize that investment was a unique combination and got us excited about that. And so it's that alignment, okay? But then also all the incremental work and investment that the Green Plains has done and is doing to actually show what Fluid Quip's outputs and products can be and will be in that proof of concept, is what dramatically derisked us and got us excited about, yes, here's what's proven. But using their people, their science and facilities, there are so many more doors that we can open, and it's more probable and achievable with them as our partner.

I appreciate it. And I guess to piggyback on that, Dwight, with your experience in South America, specifically Brazil, are there certain facets that you see as unique for the benefits down there when you look at the technologies or products compared to what you might see for Green Plains here in the U.S.? Is there some uniqueness to the Brazil opportunity?

So there's look, is as an American in terms of rule of law, infrastructure, logistics, everything such as that, we have a lot of advantages. But when it comes to weather, soil, crop flexibility, Brazil is truly blessed. And so to have a country there where you can get multiple crops in a year, where you have areas where you grow both corn and sugar. So you have a flow of input all year-round rather than a surge and a need to store. And so the really unique aspect to us for Fluid Quip's technologies into Brazil is the aspect that is you can co-locate your equipment to take corn in at a sugar plant as well and keep it running all year. Because at Adecoagro, when we did it, is you had downtime from November through February, okay, you might use your storage facilities and do some investment or maintenance CapEx. But there's a huge downtime in terms of that. So for areas where you have multi-crop, where you have multiple crops in a year. And so for you to have turned those facilities from something that is operational 8 or 9 months a year to 12 months, change the breadth of inputs, change the breadth of outputs. It's something that is generally there's more areas and plants that are applicable for that and can use that than there are in the U.S. correct me if you think I'm wrong on that, Todd.

No, I think it's very exciting. The Flex technology was another reason, obviously, is to be able to -- the leading technology in Brazil on Flex. Flexing a plant between corn and sugar. I think that's very, very interesting and a huge opportunity for the Brazilian market as well and for Fluid Quip. So that's another very exciting part for us. And in those 6 months that you're making corn ethanol, you're also making non-GMO proteins for Norway with a very high value and very good protein levels.

And we hope eventually larger markets than Norway, although Norway is a good start.

It's a good start. Yes.

Global markets. Yes.

Yes. One question came in that is interesting is, Todd, you talk about moving the aquaculture industry from the oceans into the farms. And it's amazing, actually seeing that in person at Shen and kind of an aha moment of what you're seeing for future there. Is -- do you have a mindset, is the U.S. aquaculture industry set to grow quicker than the rest of the world in regards to Southeast Asia, other places like that? Are we there yet where we're leading the growth trajectory?

I think the world is on this story. I don't think it's going to be led by anybody. I think it's going to be a massive change in the way aquaculture is going to be operated in the world. We have some incredible farms in the United States, across the United States, the largest crop producers, largest salmon producers, all inland, now and growing. And Iowa needs to lead that and farm states need to leave that as well. Because we're going to be making, whether it's our plants or others, making high poultry -- or protein for these plants. And one of the questions I saw that came in and said, what's the protein that you're using for aquafeed? Well, it depends. It depends if -- right now in Shenandoah, we're making 52 protein -- 52% protein mechanically, as we had said in the public. It's in the public domain. We're not doing anything different other than using the Fluid Quip system, getting a 52% protein. Well, think about that. I mean that's not typical 48% protein anymore. Now you put that into Aquafeed or you put that into pet foods. It's a game changer, especially with the yeast component. So I think it's an incredible thing that's going to happen in the next 10 years. And they're looking for more and more solutions. There hasn't been innovation in aquafeeds in a very, very long time until now and what we're doing. And what we're doing in Shenandoah is a microcosm of what a real aquaculture facility looks like. Believe me, it's -- ours is a tiny little spot compared to what a large corporate-scale aquaculture system looks like.

Yes, Michael, in terms of scale, the U.S. won't lead -- we might lead in terms of percentage growth and change just because our base is so much smaller. Like we don't think the world understands how much aquaculture grew over the last 18 months in China when their hog herds were decimated. And so how much they had to actually increase their poultry and aquaculture. And at the moment, they're using unsustainable methods and poor, inefficient methods to feed that massively larger base in terms of aquaculture. But if you take a look at the growth you've had at -- all in Asia from Vietnam up into China, and that's now growing in India. And so while the U.S. is going to have material and dramatic growth and needs to, in terms of scale, the probability of us catching up in volume, I fail to see.

Yes. One thing we haven't really talked about that comes up because I think in the traditional ethanol space, fuel markets, one of the leading conversations is legislation. What's going on in the EPA? What's going on in government, where -- what's going on with the [ RINs ]? What's going on with those cases? Do you see concerns for legislative hurdles in these new market spaces as you broaden that market going forward? I guess, Todd, I would start with you there.

Yes. The reason we're investing in protein, oil and sugar is because we don't see it, and we see the opportunity of it. You're basically, if you think about even from a -- I know you have ESG listed on there. And clean, where basically reducing land use by more efficiently coming up with better aquaculture feeds that you can expand aquaculture growth around the world. And so I think we're going to be -- get a benefit and a tailwind on all 3 of those products that are needed around green chemicals, bioplastics and you go into oil, our DCO and how important. When you put a Fluid Quip system and you increase your distillers corn oil yield, which, by the way, is more valuable today than what was yesterday and probably going to be more valuable tomorrow than it is today, especially around the renewable diesel program. So you possess one of the lowest carbon feedstocks, we do as an industry, that we're not exploiting either. And I think we have an opportunity to do that because every time you put in a new MSC system, you also make more distillers corn oil. That's the natural benefit of it. And then we have to go figure out how to go get more of that because it's becoming more valuable every day. I think we have tailwinds around anything other than what we're doing in our Gen 1 or what we call 1.0, I think, is a tailwind on all of these other products.

Yes. And I think Dwight, you mentioned, the key -- when you look at ESG carbon clean for Ospraie, it's not about, oh, we'll get a premium for these in the end. It needs to be a cost benefit, also you have some of these achievements. And if that's the case, and like you say, Todd, possibly anything on the legislative side, it's more of a tailwind push that happens to be a bonus as you come into some regions that as things -- the landscape changes. And they want to encourage some of that cleanliness it's just kind of icing on top but not the base of the model.

I mean it's as Todd said, the aspect for us for those markets is there might be government oversight or inspection to maintain quality standards, but the markets and the demand doesn't exist because of government regulation and pull. They're just there to sort of ensure an aggregate level of how facilities are. But the entire aspect of the economics of the market are driven by the private and the consumer pull and the economics. And that's the aspect that we can then have conviction in.

Yes. We appreciate it. I might mention, we've seen some questions come in on kind of the technology itself. And as Todd mentioned, happy to do visits. People can come see it, touch it, feel it for real there. On some of our previous FQ talks, we've had quite a few protein episodes that really get into more of the technology. So for some outside the industry, a little more curious on that space, I didn't want to get into too much technology today on how we do it. We got some great shows there. You can see on how we do it. And then even into this protein space, Walter Cronin from Green Plains joined us to talk about world protein markets as well, too. That's a great episode that people can look at for a little bit more information in there. But gentlemen, as we come back to the top of the hour, and I have try to keep us on schedule here, are there things you're hoping to be able to share today, maybe we didn't get to talk about already, that was something you wanted to make sure people got to hear from you today?

Well, how about I lead and, Dwight, I'll let you close out the show, how does that sound?

Yes. I'm sure there's millions of things you'd love to share, but let me say, we're limited to, what, 4 minutes here. So...

Yes. No, I haven't seen in -- I always knew that this industry had great optionality in what we do. We were just -- never got there and exploited it. Although we did find many opportunities, whether it's around corn oil in the past, whether -- now it's around upgrading our specialty alcohol business, whether it's around things we did with dry ice and CO2. And I think we're just on the cusp of the evolution of this industry. We've got to leave some things in the rearview mirror, and we've got to go after some things that are in front of us. And it's going to be around lowering our CI scores, carbon, our efficiencies, those -- I think those are coming to this industry as well that nobody is paying attention to in all of our stories and what we do. And then put on top of that, the fact that if you take a look in the last 10 years, what this industry has done around cleaner, better, E -- our ESG story is so much better than it was when we started, and we've got to tell that story. And on top of that, if we have sustainable proteins, we have clean oils and sustainable renewable oils. And on top of that, we've got clean sugars. I think that's -- the next 10 years is going to be more interesting for sure than the last 10 from an opportunity standpoint. So I think our portfolio -- our product portfolio in the industry is just going to get bigger, bigger and bigger by the use of these technologies.

That's great, thanks.

Michael, I don't have much to add. An hour's longer content than I'm generally capable of. So I want to thank the audience for their time, attention and interest. But most importantly, for yourself and your partners, is the aspect of -- we sat down with yourselves. We -- you guys spent the time with us to help us understand what you guys and your equipment is capable of doing for your customers and for different plants, and to work with Green Plains Todd, and his entire team as partners. And to give you guys the support to help try and realize that patient and grow and develop it from here. We're excited and thankful to be part of it and look forward to working with you and potentially other people who are on this webcast to try to achieve that and actually make concrete some of that economic benefit for them. So that's about it.

Yes. Thank you. And we appreciate it for both of you guys. It's a great partnership. And I think it's been said, but we look at it as a great way to accelerate everything we're doing and get on a great team to really impact and go out and change the world where we want to see it go in a lot of these spaces that we see up here listed on the screen. So we certainly appreciate the partnership and the belief in what we're doing from you guys, too. So thanks for sharing today and taking the time to talk with everyone.

Thank you, everyone.

Well, thank you.

Thank you, guys. That was a great show. I had a lot of good feedback and focus in there and throughout the show. So I appreciate it. Just a quick reminder that you can catch this show, recorded version, usually have it up on the website by midday tomorrow. And so as you all waited, the music play out is here.