Not all of the grain processed for fuel ethanol is lost from the livestock feed chain. Some of it goes back to work as livestock feed.
For every bushel of corn going into a fuel-ethanol plant, 16 lbs. (wet milling process) to 18 lbs. (dry milling process) of energy, protein and mineral feed come back out. Or, put another way: For every 3 bu. of corn taken out of the livestock feed stream for ethanol production, the equivalent weight of nearly 1 bu. of corn returns as animal feed.
Availability of ethanol feed coproducts has soared right along with fuel ethanol's demand and production the past couple of years.
A recent USDA survey reveals that roughly half of the cattle and hog operations in a 12-state region either fed ethanol coproducts or considered feeding them in 2006. That survey covered 9,400 producers in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.
While livestock producers have embraced this feed source, there are concerns among their ranks about ethanol production's impact on prices for livestock feeding. Livestock industry groups, such as the National Cattlemen's Beef Association (NCBA) and the National Pork Producers Council, question ethanol's long-term ability to play a growing role in this country's gasoline supplies without driving up feed costs beyond competitive levels for feed use.
Ethanol proponents point to ethanol coproducts for livestock feed as one of the factors offsetting ethanol-driven grain demand and prices.
U.S. 2007 ethanol production was about 6.5 billion gallons — approximately 4% of the U.S. finished motor gasoline production — according to the Renewable Fuels Association (RFA). That output is already close to the expected annual production of 6.8 billion gallons of ethanol and biodiesel by 2010 under the renewable fuel standards in the 2005 Energy Policy Act.
The U.S. has 130-plus ethanol plants with an annual capacity of more than 7 billion gallons of ethanol, according to the RFA. At the conversion rate of 2.8 gal./bu. of corn, ethanol production in 2006 required about 2 billion bushels of corn — about 20% of the 2006 crop. RFA's estimated 7-plus-billion-gallon ethanol-making capacity at the end of 2007 would require a little more than 2.5 billion bushels of corn — about 20% of 2007's much larger corn crop.
At 16-18 lbs. livestock feed/bu. processed into ethanol, 20-22 million tons of feed would result if the 130 plants produced at their current capacity of 7-plus billion gal./year. By comparison, roughly 5.6 billion bushels (around 156 million tons) of corn went into U.S. feed and residual use during the 2006-2007 marketing year, according to USDA's World Agricultural Outlook Board.
Eighty percent of feed coproducts from U.S. ethanol plants are fed to livestock in this country. The remaining 20% wind up in exports and other uses. More than 85% of ethanol feed coproducts are fed to beef and dairy cattle, while hogs and poultry account for the balance, according to the RFA.
CORN COMPRISES MOST of the grain that goes into fuel-ethanol production.
When you make ethanol out of corn, about one-third is ethanol, one-third is carbon dioxide and one-third is dried distillers grain with solubles (DDGS), says Mindy Schweitzer, marketing manager at POET Nutrition. The firm markets the DDGS for POET, a Sioux Falls, SD-based ethanol producer with 21 plants that process about 350 million bushels of corn annually. So, for example, 9% crude protein corn processed into ethanol would yield DDGS with roughly 27% crude protein.
Prices of distillers grains tend to track with corn, according to David Easler, general manager of the POET biorefining ethanol plant at Bingham Lake, MN.
Coproducts' value depends importantly on consistent quality standards, he adds. That's the whole idea behind POET's marketing of its Dakota Gold, a 10% moisture DDGS product. Its value is based on closely controlled, reliably consistent quality standards — “what an end user needs to know relative to fitting it into the rations for his animals,” Easler adds. “That's where we depend on the doctor.”
The “doctor” is the company's livestock nutritionist Matt Gibson. For beef cattle, on a dry-matter basis, DDGS have 5% more net energy than No. 2 yellow corn, Gibson says of his company's Dakota Gold. For dairy cattle, it's 10% more net energy.
For non-ruminants, such as hogs and poultry, energy comparisons between corn and DDGS are expressed as metabolizable energy, Gibson explains. DDGS have about 2% more metabolizable energy than corn for hogs, but only 80% as much metabolizable energy as corn for poultry, he says.
Newer research at land-grant universities shows much higher nutritional values for ethanol coproducts than what has been published historically, according to Gibson. It'll probably be 5-10 years before the new, higher values show up in government publications, such as those published by the National Research Council (NRC), Gibson says, because NRC numbers are updated infrequently, he adds.
Livestock nutritionists generally say beef finishing rations can contain up to about 30% DDGS on a dry-matter basis without affecting performance or meat quality. For hog-growing/finishing rations, it's 10% of the ration. Also, compared to a corn-soybean diet for non-ruminant animals such as hogs, amino acid supplementation may be needed when the ration exceeds 10% ethanol coproduct feed.
Different ethanol processing methods produce different feed coproducts. DDGS and wet distillers grains with solubles (WDGS) come from dry-grind or dry-mill ethanol plants. Corn gluten feed and corn gluten meal come from wet-milling ethanol plants.
For example, Gibson notes, some of POET's plants are dry grind while others are dry mill. The dry-grind coproduct is nearly 30% crude protein. The dry mill produces a high-protein feed that's nearly 45% crude protein and has higher levels of many essential amino acids than those of the industry-standard dry-grind coproduct, according to Gibson.
Livestock nutritionists point to a number of factors that affect value of ethanol coproducts for livestock feeding, including: type of ethanol process making the feed, quality of the grain processed for ethanol, the plant making the product and the age and species of animals eating the ration.
Quality varies within each type of coproduct. The American Feed Industry Association, RFA and the NCGA have proposed solutions for determining nutritional values of ethanol coproducts in livestock rations.
ETHANOL VS. FEED
Ethanol proponents say ethanol coproducts, such as dried distillers grains for livestock feeding, help offset the grain channeled into ethanol production.
However, livestock organizations such as the National Cattlemen's Beef Association (NCBA) and the National Pork Producers Council (NPPC) see federally mandated ethanol production levels and state and federal tax credits driving grain prices beyond economic levels for livestock feeding.
These groups support ethanol. But, now that federal incentives and support from state governments have gotten ethanol off the ground, the NCBA says it would like to see a market-based approach to renewable fuels development, rather than mandated ethanol production levels and subsidies.
The NPPC favors reducing federal subsidies for ethanol, along with more reliance on the market for ethanol development. But, it isn't opposed to mandated production levels. Both organizations are concerned about the lack of a mechanism in federal policy to address demands for corn in the fuel, feed and food industries “in the advent of adverse weather conditions or infrastructure bottlenecks.”
In response to concerns over grain supply for feed and food, the National Corn Growers Association (NCGA) says corn yields have increased by about 3.5 bu./acre/year since 1995-1996. Based on that 10-year historical upward yield trend, corn yield per acre could reach 180 bu. by 2015, according to the NCGA. At 2007's 86.1 million harvested corn acres, a 180-bu. yield would result in a 15-billion-bushel crop.
The NCGA also points to improved technology that will help wring more ethanol from each bushel. The organization says ethanol conversion has gone from 2.5 gal./bu. several years ago to 2.8 gal./bu. today. And, it may be 3 gal./bu. in the near future, according to the NCGA.
The NCGA also says a portion of the acres in the 35-million-acre Conservation Reserve Program (CRP) might come back into crop production as CRP contracts expire.