RFA Submits Comments on Animal Feed Rule

RFANewlogoThe Renewable Fuels Association (RFA) submitted comments to the Food and Drug Administration (FDA) yesterday on the supplemental rulemaking proposal outlining best practices for the regulation of animal food under the Food Safety Modernization Act (FSMA). The act outlines regulations for animal feed, which includes the ethanol co-product dried distillers grain.

RFA submitted comments earlier this year following the initial proposed rule noting that animal feed would be unnecessarily regulated in a similar fashion to human food. RFA praised the FDA for addressing this concern in its updated version, noting that the “revised CGMPs (current good manufacturing processes) in the supplemental proposed rule appear more applicable to the animal feed industry and appear to provide more flexibility for the wide variety of the animal feed facility processes covered.”

However, RFA raised concerns with additions to the rule that would implement “…product and environmental testing programs, supplier approval programs, and verification programs that were not in the initial proposed rule language.” The comments stress that an individual plant “…should be provided the flexibility to determine its own needs and compliance strategy.” RFA also noted that “If applied in a prescriptive and indiscriminate way, these programs can add unnecessary cost burdens and divert resources away from the effective practices that ethanol producers currently use to assure safe, high quality co-products.”

Read RFA comments here.

Evolving Distillers Grains: Take the Survey

Iowa State University is looking at how the use of distillers grains have changed in the United States over the past several years. Interested growers are invited to participate in a survey currently being conducted by Iowa State University Assistant Professor Dr. Kurt Rosentrater. The survey findings will create a better overall picture of the roll distillers grains play in the livestock industry today and provide important insight into possible points of improvement in the future.

The survey is funded, ddgsin part, by the National Corn Growers Association (NCGA) Ethanol Committee as part of the team’s efforts to increase understanding of how this ethanol co-product benefits farmers, ranchers and ethanol producers alike.

“I encourage anyone who might be able to provide information on how they use distillers grains on their operation to take a few minutes and complete this survey,” said NCGA Ethanol Committee Chair Jeff Sandborn, a Michigan farmer. “As the use of distillers grains continues to grow and evolve, data gained through this survey will enable producers to improve their offerings and thus will benefit the very livestock producers that we would like to participate. Using corn to produce fuel and feed is already a win-win-win situation. Now, we want to make it that much better.”

To take the survey, click here.

Ag Subcommittee Hears Pros and Cons of RFS

glauber1The food versus fuel debate arose once again in front of Congress. At last week’s U.S. House Ag Subcommittee hearing in Washington, D.C., opponents and proponents of the Renewable Fuels Standard presented their arguments on the RFS and its impact on the livestock industry.

One of the biggest opponents of the RFS is the poultry industry. Their members argued that ethanol has forced up feed prices that keeps them from expanding operations and fulfilling consumers’ needs to have a cheaper alternative to beef and pork, calling the RFS “broken beyond repair.” But the chief economist at the U.S. Department of Agriculture, Dr. Joseph Glauber, said while ethanol initially did have an impact much bigger factors forced up the price of feed.

“Certainly, the ramp up [in ethanol production] we saw from 2005 to 2010 had a big impact on corn prices, but we also saw a big increase in energy prices, so it’s not the only thing going on,” he told the committee.

In fact, during that same ramp-up period, petroleum prices shot up to record levels, and RFS proponent, Roger Johnson, President of the National Farmers Union, said the agriculture industry should be united for renewable fuels.

“The World Bank found that crude oil is the number one determinant of global food prices. We should reduce our dependance on oil consumption in order to be more food secure, and biofuel production is an excellent way to do that,” adding that pitting the biofuels industry against the livestock growers is counter-productive.

The bottom line, according to Glauber, is that biofuels are important, and they’re here to stay.

“Corn-based ethanol is a vibrant industry and is competitively priced against gasoline, and producers will continue to produce ethanol from corn as long as profit margins are there. And profit margins have been there.”

Global Farmers Learn Value of Ethanol

corn-couserEach year during World Food Prize week, the Truth About Trade and Technology Global Farmer Roundtable brings farmers from all over the world to visit Couser Cattle Company in Nevada, Iowa.

Owner Bill Couser not only produces cattle, he also grows plenty of corn on his operation and is a big proponent of ethanol as a means of getting the most out of every kernel. “It’s no different than a barrel of crude. We don’t just get gasoline from a barrel of crude. We take it apart and get many different things,” he said. “When we look at corn, we can feed it, we can take it to ethanol plants, we can sell it domestically, we can sell it abroad.”

As a founder of Lincolnway Ethanol plant, Couser is really excited about the cellulosic project with DuPont using corn residue. “We’ve got the residue there and if we manage it correctly, we have a new cash crop,” he said. Interview with Bill Couser

Couser, who is also a former president of Iowa Renewable Fuels Association, showed a powerpoint presentation adding up the multiplier effect of a single acre of corn going to an ethanol plant. When he figured that final amount corn was $7 a bushel and it added up to over $12,000 per acre. But even at $3, it’s still nearly $8,000. Watch the video to see how he determines that.

2013 TATT Global Farmer Roundtable photos

Impact of RFS on Agriculture

Increased ethanol production has been good for corn growers, bad for poultry producers, but has overall helped increase farm income to record levels according to some testimony given in a House hearing on the Renewable Fuel Standard (RFS) this week.

rfs-hearing-pam“The Renewable Fuel Standard is doing exactly what it was intended to do,” said National Corn Growers Association President Pam Johnson of Iowa. “It has positively impacted the agriculture sector by creating jobs and promoting rural development, reducing greenhouse gases and allowing our nation to grow our energy at home.” Pam Johnson Testimony

rfs-chicken National Chicken Council (NCC) Senior Vice President and Chief Economist Bill Roenigk said at the hearing that poultry producers have struggled with rising feed costs. “Since the RFS was implemented in October 2006, the feed costs for chicken, turkey and eggs have gone up $50 billion,” he said. “More troubling than the higher costs is the volatility and trying to outguess the market.” Bill Roenigk Testimony

rfs-hearing-hurtPurdue University agricultural economist Chris Hurt told the hearing that farm income and land values have risen dramatically since implementation of the RFS. “Higher farm incomes on crop farms benefited rural communities as that higher income spread through local purchases of farm and consumer goods and services,” Hurt said. “In addition, expansion of the ethanol industry in rural communities added some employment and related economic activity.” While feed costs have increased and the crop sector has done better than livestock, Hurt said the livestock industries appear to in a recovery phase. Dr. Chris Hurt Testimony

Beef Ranches as Biodiesel Refineries

humphreyThe next set of biodiesel refineries will probably continue to be in rural America, but they might be part of livestock operations. This article from BeefProducer.com says Arkansas State University researcher Kevin Humphrey sees real potential for ranchers to produce their own biodiesel from oil seed crops, waste oil or tallow:

“If all you want to do is extract oil and meal, you can do that. If you want to extract and produce meal and then also produce biodiesel, you can do that,” he says.

Humphrey is using waste oil and oil seed crops — soybeans, canola, and camelina — to make biodiesel. He adds he hasn’t used animal fats but that is a viable option.

Matt Roberts, vice president of marketing for Springboard Biodiesel, says if the oil is collected free, as might be beef tallow from rendering, the biodiesel will cost about 95 cents per gallon to make. That price includes the cost of the chemicals to make the biodiesel — methanol, lye, and sulfuric acid.

The article goes on to point out that with many of the biodiesel feedstock oilseeds, especially soybeans, the resulting meal from the crush is a high quality feed. Plus, the glycerin from biodiesel production can be a livestock feed and an ingredient in soaps, lotions and lubricants.

The author also spoke with Darrell Wood, cattle rancher and owner of Leavitt Lake Ranches in Vina, California, who believes a ranch-based biodiesel refinery might just make his place more sustainable.

“It just opens the door for all kinds of possibilities,” Wood says.

Pretty good article. Give it a read here.

American Farm Bureau Supports RFS

AFBF President Bob Stallman Press ConferenceDelegates for the American Farm Bureau Federation (AFBF) last week voted overwhelmingly to support continuation of the Renewable Fuels Standard (RFS), despite the fact that membership in the organization includes a substantial percentage of livestock producers.

“The livestock guys still have concerns about high feed costs, and I’m one of them, I’m a beef producer,” said AFBF president Bob Stallman. “On the other hand, we have this renewable fuels infrastructure that’s in place, a very large industry that employs lots of people and provides a market for a lot of products, so we need to be very careful not to have policies trying to dismantle that.”

There were 362 voting delegates at the 94th AFBF Annual meeting in Nashville last week representing every crop and livestock sector in the 50 states and Puerto Rico. The policies approved at the annual meeting will guide the nation’s largest general farm organization in its legislative and regulatory efforts throughout 2013.

DF Cast: Biodiesel Helps Livestock Producers

We’ve known for quite a while that biodiesel is helping the bottom lines of feedstock producers, in particular, the nation’s soybean growers. But a new study from the National Biodiesel Board says livestock producers are also sticking more green in their pockets thanks to the green fuel.

In this edition of the Domestic Fuel Cast, we hear from the NBB’s senior advisor for economic issues, Alan Weber, and NBB member and Nebraska farmer and livestock producer Greg Anderson, who explain the bottom line results from a new study.

Check out the NBB’s reports here: AF T BD Demand Impact Final and SBM Analysis Feb 2011 Final

You can listen to the Domestic Fuel Cast here: Domestic Fuel Cast - Biodiesel and Livestock

You can also subscribe to the DomesticFuel Cast here.

Algae Producers Look to Market By-Product of Biodiesel

Just as ethanol producers have been able to market the co-product dried distillers grains (DDGs) as livestock feed, those folks producing algae for biodiesel want to find more uses for what’s leftover once you get the fuel out.

“The Departments of Energy and Defense have been interested in producing biofuels, both jet fuels and transportation fuels from algae,” Texas A&M’s Tyron Wickersham told USDA reporter Rod Bain. “We began looking into [by-product of algae] to figure out a way to market or place the co-product into some useful market that could make use of those nutrients, and they naturally turned to livestock with an emphasis on beef cattle.”

Wickersham’s colleague at Texas A&M, Merritt Drewery, explained they are experimenting with feeding the algae by-product directly or mixing it with DDGs or cotton seed. “And this project actually told us that algae was palatable, because they ate it here.”

The researchers are already noting in their study that the algae co-product has a high-protein content.

Listen to Rod Bain’s report here: USDA Report on Algae Biodiesel By-Product as Livestock Feed

Visiting Farmers See Cattle/Ethanol Operation

A group of 17 farmers from Canada, Honduras, India, Mexico, New Zealand, Philippines, South Africa, Swaziland, United Kingdom, Uruguay, US, Zambia, and Zimbabwe had the chance to visit a livestock operation with an ethanol plant next door.

The annual Global Farmer Roundtable, organized by Truth About Trade & Technology (TATT), makes Couser Cattle Company a regular stop for the international farmers each year. TATT Chairman Emeritus Dean Kleckner, former president of the American Farm Bureau Federation, is a big supporter of ethanol himself. “I’m a believer in ethanol from corn,” said Kleckner during an interview at World Food Prize, where the roundtable is held each year. “The corn that is used for ethanol, a lot of that comes back to farmers in the form of distillers grains.”

Couser Cattle Company owner Bill Couser was instrumental in starting the farmer-owned Lincolnway Energy ethanol plant in Nevada, Iowa, which is located next to his operation so he can take full advantage of using distillers grains as feed for his livestock.

Outlook For The Supply & Demand Of DDGS

Distiller grain production was a hot topic discussed throughout the 2012 Export Exchange. Dr. Bob Wisner, Agriculture Extension Economics at Iowa State University, shared his research on the future of DDGS and what we can expect in the coming years. He also spoke on how this years drought affected DDGS production and it’s long-term affect on our US supply.

“The biofuel industry has expanded extremely rapidly in the last six years. It has become a major feed ingredient domestically and in the international market. Here in the United States it’s marketed in several different forms. We have dried distiller grains, that are dried to 10% moisture. We have a modified distiller grain that is partially dried. We have a wet distiller grain that is especially useful in the beef feeding industry. It gives a higher feed conversion efficiency versus corn than dry distiller grains. We have quite the combination of alternative uses here in the United States that for those of you outside the US are not generally available.”

“This is the first year in the last 17 years that we have seen a significant decline in distiller grain production. That of course is being driven by the severe drought here in the United States.”

In conclusion, Dr. Wisner shared these major things that will determine the supply and demand of DDGS.

  • DDGS production follows ethanol production level and corn cost.
  • Prices as % of corn/sbm price higher than in the past: 105%-108% of corn this winter.
  • Prices for all feeds including DDGS will be extremely sensitive to South American weather in the next 4 months.
  • After the current marketing year, with a return to more normal US crop yields, DDGS supplies will likely resume a longer-term uptrend, but at a slower rate than in the last six years.
  • Risk of US domestic DDGS market saturation is low.
  • DDGS exports likely will be growing competitor with the domestic feed industry.
  • Longer-term future production and use depends heavily on policy issues and fuel prices.
  • Important emerging issue: Will oil removal from DGS impact the value by species?

Listen to Dr. Bob Wisner’s complete presentation here: Dr. Wisner at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange

Vilsack Defends Ethanol at Dairy Expo

Secretary of Agriculture Tom Vilsack held a town hall meeting at World Dairy Expo in Madison, Wisconsin this week and took questions from the audience, one of which concerned ethanol and the impact it has had on livestock producers.

The questioner, who was from California, said ethanol was “not a very popular word” with dairy farmers in her state. “Where I come from ethanol is not a four letter word,” Vilsack responded, noting that ethanol has not only helped increase profitability and production for farmers but also helped the economy, national security, and the environment. “Those are the benefits – jobs, higher incomes, lower gas costs, environmental benefits and reduction of our reliance on foreign oil,” said Vilsack.

The secretary also carefully explained that because ethanol returns livestock feed to the market in the form of distillers grains (DDGS). “We hear a lot of people say that 40% of the corn crop is being used for fuel production but it’s not really 40% because a third of it comes back in DDGS which is used by the livestock industry,” he said. “So, it’s less than 40%, more like 27 percent.”

In addition, Vilsack talked about how USDA is helping the industry move into the production of advanced ethanol using feedstocks beyond corn. “We have financed at USDA nine separate biorefineries that use corn stover, algae, switchgrass, woody biomass, agricultural waste, municipal waste,” he said.

Vilsack also defended the Renewable Fuel Standard (RFS) and the current request before EPA to waive that standard, noting that Congress passing a new food, farm and jobs bill would do more to help livestock producers impacted by high feed costs due to the drought than waiving the RFS would.

Listen to or download Vilsack’s comments here: Ag Secretary Vilsack on ethanol at Dairy Expo

RFA Expects RFS Waiver to be Denied

Responding to plans by livestock and poultry groups to seek a waiver of the Renewable Fuel Standard, the head of the Renewable Fuels Association (RFA) expects the request to be denied.

“Given the flexibilities inherent to the RFS, and the fact that waiving the program would not result in any meaningful impacts on corn prices, we fully expect Administrator Jackson to deny any waiver request,” said Bob Dinneen, RFA president and CEO. “A dispassionate review of the facts can lead to only one conclusion: a waiver of the RFS would simply reward oil companies that have long sought to repeal this very important and successful program. The RFS has reduced our dependence on imported oil and saved consumers at the pump.”

RFA“This summer’s hot, dry weather conditions have caused significant challenges for all users of grain,” Dinneen said. “We understand the hardships facing the agriculture industry this summer are serious. From extremely poor pasture conditions to heat stress on animals to reduced crop yield potential, this summer’s circumstances have been difficult. However, waiving the RFS won’t bring the type of relief the livestock groups are seeking, nor will it result in significantly lower feed prices. In fact, because ethanol plants also produce a high protein feed, limiting ethanol production will only further complicate drought related feed issues and costs.”

“The marketplace is the most efficient mechanism to ration demand, not the government, and that is already happening,” Dinneen continued. Dinneen pointed out that the ethanol industry has already begun to respond to sharply higher corn prices by significantly reducing production. The industry’s consumption of corn last week was the lowest in over two years and down nearly 14% in just the last six weeks.

Still, despite the downturn in production and continued demand rationing by the ethanol industry, obligated parties (petroleum refiners and blenders) should have no problem meeting the RFS. The ability of obligated parties to “bank” excess Renewable Identification Number (RIN) credits and use them for compliance in the following year provides a significant measure of flexibility that takes pressure off of the corn market in the event of a short crop. It is estimated that some 2.4 to 2.6 billion excess renewable fuel RIN credits are currently available to obligated parties, equivalent to nearly 20 percent of this year’s RFS renewable fuel requirement.

Livestock and Poultry Groups Seek RFS Waiver

Livestock and poultry producers are filing a petition with the Environmental Protection Agency (EPA) seeking a waiver from the Renewable Fuel Standard (RFS) in light of the current drought situation likely to cause feed shortages.

“I and NCBA support American ethanol,” said National Cattlemen’s Beef Association president J.D. Alexander of Nebraska. “I’m not asking for a handout. I’m asking for the federal government to let the market work.”

“Relief from the Renewable Fuel Standard is extremely urgent,” said Past National Chicken Council chairman Michael Welch, President & CEO of Harrison Poultry in Bethlehem, Georgia.

Alexander and Welch were joined at a morning press conference by Randy Spronk of Minnesota, National Pork Producers Council president-elect and John Burkel, Minnesota turkey grower and National Turkey Federation vice chairman.

Listen to opening comments at a press conference this morning from the four organization leaders here: Livestock and Poultry groups

Under questioning by reporters, the groups were pressed about their legal capability of being able to even request the waiver, since the Clean Air Act states that a waiver can only be filed by an EPA administration, obligated party, or a governor – as was the case with Rick Perry of Texas in 2008. Michael Formica, NPPC Chief Environmental Counsel, clarified. “We petitioning her (EPA Administrator Lisa Jackson) to use her authority to waive the rule,” he said.

Listen to questions and answers from the press conference here: Livestock and Poultry Q&A

National Corn Growers Association (NCGA) President Garry Niemeyer of Illinois says they believe it is premature to ask for a waiver of the RFS right now, but better than asking for a change in the law. “With the crop still in the field, it is too early to determine this year’s final corn supply. In addition, the ethanol industry now has a significant surplus of ethanol and RFS credits that can greatly offset ethanol’s impact on the corn supply,” he said. “However, we recognize the severe impact of the drought on our farmers and our customers, here and abroad, with livestock, poultry, ethanol and other processing facilities, and we believe the flexibility of the RFS does work, and will work. NCGA also supports the waiver process that is embodied in the current RFS, and respects the right of those that may file a waiver petition to do so.”

Ethanol Co-Product Prices Higher

Tight corn supplies, higher corn prices, low ethanol processing margins, export demand and high soybean meal prices are among the factors contributing to higher prices for dried distillers grains plus solubles (DDGS), the ethanol co-product used as livestock feed.

South Dakota State University economics professor Darrell Mark says price for distillers grains usually declines going into summer as cattle feedlot inventories decline and more cow herds and stockers are turned out to pasture. This year, however, distillers grains prices have been increasing going into summer.

“The average price for dried distillers grains plus solubles (DDGS) in South Dakota increased about $3/ton during each week of May although it did moderate some in the first two weeks of June. While domestic demand from the cattle industry is not substantially deviating from normal seasonal trends, several other supply and demand factors have driven the price increases in recent weeks and are likely to continue through the summer months,” said Mark, a market analyst for iGrow.org.

“With high corn prices, ethanol producers have struggled to maintain margins, and are finding incentive to run at reduced capacity and shut down plants for longer periods of time for maintenance, etc.,” Mark said. “Doing so can lessen their losses, but it does reduce the amount of distillers grain produced as well. Thus, with lower supply of distillers grains, prices tend to rise, as have been seen throughout 2012.”

Mark encourages producers to discuss this issue with their current distillers grain suppliers and understand their plant production schedule. He also suggests they purchase product from two or more plants to help offset risk associated with losing distillers grain from one particular plant.

Higher soybean meal prices and export demand for DDGs is also helping to boost prices but Mark expects the impact of the high old crop corn prices and soybean meal prices to lessen by early fall as U.S. corn and soybean supplies become available.

“With the prospects for a record large corn crop and lower prices, ethanol production is likely to increase as margins improve, thus increasing distillers grain production,” he said.