Domestic Fuel

There is a lot made about tensions between the ethanol and livestock industries but the distillers grains co-product of ethanol production is providing significant benefits for animal producers even as ethanol has helped prop up corn prices.

A great discussion at the 6th Annual Iowa Renewable Fuels Summit featured corn and cattle organizations on the same panel talking about the “Synergies of Livestock and Ethanol.”

Moderator Iowa Agriculture Secretary Bill Northey opened the discussion by noting that sales of crops and livestock have risen as ethanol production has increased from $12 billion in 2002 – 6 billion in crop and 6 billion in livestock – to $24 billion in 2010, and 2011 is expected to be about $30 billion with at least $13 billion of that for livestock. “$13 billion on the livestock side versus $6 billion nine years ago,” Northey said. “Has ethanol been good for livestock agriculture in Iowa? I think very clearly.”

Listen to a brief interview with Secretary Northey here: Iowa Agriculture Secretary Bill Northey

Iowa Cattlemen’s Association Executive Director Matt Deppe says it’s easy to see the benefits that distillers grains (DDGS) have brought to especially cattle feeders. “We look at it as a corn replacement,” Deppe says about DDGS. “It means that they (feedlot operators) have another option that’s cost effective to put into their rations.”

Listen to an interview with Matt Deppe here: Matt Deppe Interview

The livestock industry has traditionally been the most important market for corn, noted Iowa Corn Growers CEO Craig Floss, although use for ethanol has increased significantly in the past decade. “But a third of every one of those bushels that goes into an ethanol plant goes into DDGS,” he said.

The panel also included Randy Ives, director of ethanol services for the commodity management firm Gavilon Group.

Listen to or download the entire panel discussion here: Ethanol and Livestock panel

Photos from 2012 Iowa Renewable Fuels Summit

A new U.S. Department of Agriculture (USDA) report finds that the ethanol co-product known as distillers grains or DDGS is replacing even more corn and soybean meal in livestock and poultry feed rations than previously thought.

According to the report by USDA’s Economic Research Service (ERS), “We found that, on average, for the past 5 crop years (2006/07-2010/11), 1 mt of distillers’ grains substitutes for about 1.22 mt of corn and soybean meal combined in the United States.”

The report also noted that “Feed market impacts of increased corn use for ethanol are smaller than that indicated by the total amount of corn used for ethanol production because of DDGS.” In fact, ERS found the amount of feed (corn and soybean meal) replaced by the DDGS represents nearly 40 percent (on a weight basis) of the corn used in the associated ethanol production process for a given crop year.

Read the report here.

“The value of the animal feed produced by the ethanol industry has long been misunderstood, understated and misrepresented,” said Geoff Cooper, Renewable Fuels Association Vice President of Research & Analysis. “Distillers grains continue to be the industry’s best kept secret, despite the fact that we are producing tremendous volumes of this high value feed product today. DDGS and other ethanol feed products significantly reduce the need for corn and soybean meal in animal feed rations. Over the past several years, distillers grains have been one of the most economically competitive sources of energy and protein available on the world feed market. While some critics of the ethanol industry attempt to downplay the role of DDGS, the facts simply can’t be ignored.”

RFA believes the report has important implications for discussions regarding ethanol’s impact on feed grains availability, feed prices, land use effects, and the greenhouse gas (GHG) impacts of producing corn ethanol.

Read more about the report from RFA here.

While there have been some in the livestock industry that have had some real heartburn with biofuels, a new report shows that biodiesel has actually made animal feed more affordable.

The National Biodiesel Board has released a new study that shows how soybean oil and meal economics favor the livestock industry, potentially saving farmers and ranchers $4.8 billion from 2005 through 2009:

The basic rule of thumb is when demand for soybean oil increases, the price of the other soybean component (soybean meal) decreases, says the U.S. Department of Agriculture funded study by CENTREC Consulting Group, LLC. Increasing demand for soybean oil benefits livestock feeders through lower meal prices.

“No matter whether you are feeding pigs or people, biodiesel is helping meet the world’s growing demand for protein,” Dumoulin said. “With these economics, we would all win if the trucks that brought our soybean meal ran on America’s advanced biofuel, biodiesel.”

The NBB says this new study complements a January 2010 United Soybean Board report that showed how much biodiesel supports the soybean industry.

Swine and poultry producers are using the ethanol co-product distillers dried grains with solubles (DDGS) as feed for good reasons.

Dr. Phillip Smith, a nutritionist with Tyson Foods, spoke at the recent Export Exchange event sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council about the value of DDGS in the poultry sector.

“It’s a very good ingredient for us,” said Dr. Smith. “We’ve used it successfully and the reason we would use a co-product like that is to save money in the diet. It gives us a good cost value, nutrient value, it flows and handles and the birds perform well on it.” He says it can be use as much as 15 percent of the diet for birds, or even more in breeder diets.

He recommended to international buyers who were at the Export Exchange that they try DDGS and work with it. “If it saves money, there’s that incentive, that risk is worth taking,” he said.

Listen to or download an interview with Dr. Phillip Smith here: Phillip Smith Interview

South Dakota State University Extension swine specialist Dr. Robert Thaler talked about the use of DDGS in hogs and how it helps supply phosphorus in the diet. “Phosphorus supplementation to the diet is very expensive,” he said. “The cool thing is that the phosphorus in DDGS is highly available. So, if you’re replacing dical or monocal with phosphorus coming from DDGS, you’re going to have less phosphorus in the manure, it will probably be cheaper and plus, you’re going to have less environmental problems.”

Dr. Thaler says exporters want quality assurances when it comes to DDGS and they are also wondering how high they can go including DDGS in the diet. “A lot of them are at 5-10 percent inclusion rate in swine diets. Here in the United States, on the growth/finish side, we’re probably 20-30,” he explained. “We just have to get them to realize that there’s nothing magical we’re doing to make that 20-30 percent work.”

Listen to Dr. Thaler’s interview here: Robert Thaler Interview

A group of farmers from around the world gathered in Des Moines this week for the fifth annual Global Farmer-to-Farmer Roundtable organized by Truth About Trade and Technology (TATT) and held in conjunction with the World Food Prize.

As part of the event, the 16 farmers had the opportunity to visit Couser Cattle Company, owned by Bill Couser, who is a director on the board of the farmer-owned Lincolnway Energy ethanol plant in Nevada, Iowa. Bill conducted a fascinating presentation about his marriage of row crop farming (corn/soybeans), livestock production and ethanol production. He used a long table to display all the products he produces starting with an ear of corn and winding up with ethanol (2.81 gal/bushel of corn) as well as by-products like DDGS and ultimately fine quality beef.

Couser debunks the food versus fuel debate by explaining how corn going into an ethanol plant produces feed, fuel, food and fertilizer. Watch his presentation here:

TATT Global Farmer To Farmer Roundtable Photo Album

The ethanol by-product known as dried distillers grains, or DDGs, is being fed more often these days to all types of livestock. At first, it was mainly beef and dairy cattle producers that utilized the product, which is rich in protein, fiber and oil. Now more hog producers are using the product, which serves to recapture about one third of the corn that goes into making ethanol for the livestock feed market. Each bushel of grain used in the ethanol-making process produces about 18 pounds of DDGS.

Companies like Novus International are helping to increase the use of DDGs in pork production by researching how much DDGs can be included in hog rations at different ages for proper nutrition. “We’ve increased the inclusion rates of distillers from just a few years ago, somewhere around ten percent, now to 30-40 percent in some diets,” says Brad Lawrence, Technical Manager for the Novus pork business in North America.

During the recent World Pork Expo in Des Moines, Lawrence said that has fundamentally changed the nutritional content of the pig’s diet, so Novus did some modeling and research and found that including oxidative balance additives in the feed helped get optimum performance from the animals. “Ethanol is here to stay,” Lawrence said. “There’s some concerns about corn availability, but as we put corn into an ethanol plant, we’re getting distillers back out. As swine nutritionists, that means we have to learn what the optimum nutritional technologies are that we can implement to get the most value out of the distillers.”

Listen to an interview with Brad Lawrence from World Pork Expo here:

Podcast: Play in new window | Download (2.5MB)

Major livestock and poultry trade associations sent a letter to the House Ways and Means Committee this week asking that they allow the blenders’ tax credit and associated tariff for ethanol to expire at the end of this year. The request was made in a letter signed by industry trade associations, including the American Meat Institute, the National Turkey Federation, the National Chicken Council and the National Cattlemen’s Beef Association.

“The blender’s tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production margins — resulting in job losses and bankruptcies in rural communities across America,” the groups wrote.

The ethanol industry begs to disagree and contends that the livestock industry just wants cheap feed. “Once again, corporate livestock interests are seeking to return to the days they bought corn under the price of production for the American farmer. Such practices resulted in farmers getting more income from the government than they could from the marketplace, while corporate livestock industries prospered,” responded the Renewable Fuels Association in a statement. “Ethanol is not the major driving force behind corn prices, whether they are rising or falling. Oil prices, speculation, weather, and a host of other factors have far more to do with the price of corn than ethanol production. Consider that since the peak of corn prices in 2008, oil prices have fallen by half and speculation in grain markets has eased considerably.”

Indeed, the meat producers’ letter points out that a September 2008 report by the Congressional Research Service (CRS) stated that the dramatic increase in livestock production costs were attributed to higher costs for feed. The CRS report said that “the main driver was feed, which may account for 60%-70% of total livestock production costs in any given year.”

What the letter does not point out, however, is that the same report gave a number of reasons for the higher feed costs, including strong economic growth in developing countries, weather-related crop shortfalls (mostly in other countries and not corn), surging U.S. corn exports, higher demand for feed from livestock producers, increased corn production costs mainly to higher energy-related (fertilizer and fuel) costs, and actions by a number of foreign governments to insulate their own markets from high commodity prices. Government biofuels policy was noted as a contributing factor as well, although it was also noted that ethanol by-products can be fed by livestock producers to help offset higher feed corn prices, which makes the overall impact on feed prices difficult to assess.

A Virginia ethanol plant that uses barley as a feedstock will be offering a unique co-product as livestock feed when it comes on line later this year.

Osage Bio Energy has contracted with Land O’Lakes Purina Feed to market its barley protein meal (BPM), a co-product of its ethanol bio-processing operation. Osage Bio Energy’s first plant, Appomattox Bio Energy, located in Hopewell, Va., is currently under construction and scheduled to come online in late spring 2010. When complete, it will be the first commercial scale barley-to-ethanol processing plant in the United States.

The company reports that BPM is a “new protein-rich animal feed ingredient.”

The innovative process design of Osage Bio Energy’s plant includes a specialized milling technique that removes the hulls from the barley — thus reducing the fiber and concentrating the protein and starch. The hulls will be pelletized on-site and sold as a renewable fuel source.

The nutritional profile of BPM has unique characteristics that differentiate it in the feeding world. It has a low fat profile and high protein and lysine content relative to other grain-based feeds. Additionally, because the product is derived from barley that has not been genetically modified, it represents a new source of non-GMO animal feed for global customers.

Appomattox Bio Energy has the capacity to produce up to 250,000 tons per year of barley protein meal annually.

Agriculture Secretary Ed Schafer met with livestock, dairy, and feed grain organizations on Monday to explain how some rural businesses – including both ethanol plants and livestock industries – may be eligible for the USDA’s Business and Industry Loan Guarantee Program.

“We walked through the B&I loan guarantee program, which has been used by their memberships, and we assured them that this was a long-standing program that we would use to help finance businesses in rural America, some of them may be ethanol facilities,” Schafer said. “We assured them that no specific money was being set aside only for the ethanol industry.”

Schafer understands why the livestock industry might have been concerned about stories that came out after comments he made to reporters at the World Food Prize symposium.

“It’s one of those situations where everybody is nervous out there, a lot of these folks have seen increased feed costs,” Schafer said. “There’s been a big effort by others to blame ethanol for increased feed and food costs and certainly ethanol production has been a small portion of that but it’s easy to kick around the new kid on the block and so we attack ethanol.”

He says there was a misunderstanding among some that the government was going to use part of the $700 billion bail out package to help ethanol plants that lost money this year by speculating on the commodity markets. But, Schafer said it was important for the livestock industry to know that the loan program is there for them as well. “And we’re going to pass along the elements of the Business and Industry loan guarantee program to them that they can pass out to their members.”

The program was established in 1974 to help local rural business by backing loans from private lenders for up to $25 million for credit-worthy entities. Loans are only given after due diligence is performed and the USDA has reviewed the businesses cash flow, management and other issues.