Waterloo Cedar Falls Courier, IA
06-10-07
Cattle comeback
By MATTHEW WILDE, Courier Staff Writer
FAIRBANK --- Every morning Bart Vogel whips up a culinary delight to tantalize
the taste buds of his herd.
Some corn, minerals and protein, roughage and dried distillers grains --- a
byproduct of ethanol production --- go into the feed wagon, and out comes a
mouth-watering feast. The Holstein steers couldn't wait to get a taste Tuesday
morning, sticking their heads under the wagon's auger as it spewed out feed.
Some animals ended up with more food on their face than in the bunk.
"They seem to like it," Vogel said of feeding distillers grains rather than a full
ration of high-priced corn.
The animals like the taste. Vogel likes the price.
Corn is often the staple diet of cattle. But at more than $3.50 per bushel at local
elevators, cattle experts say replacing a portion of a steer's corn ration with
DDGs --- which often costs 5 percent or more less --- is almost a must to stay
profitable.
As a result, many industry experts think Iowa is poised to make a comeback in
cattle feeding. The top cattle producing state in the early 1970s at more than 4
million head, Iowa now ranks fifth in cattle and calves on feed for the slaughter
market at 855,000. It is the state's smallest inventory since 1948.
Since Iowa leads the nation in ethanol production, and DDGs, experts believe the
state has a competitive advantage feeding cattle over other regions.
"It definitely creates an opportunity to cash in on DDGs. Feedlots closer to
(ethanol plants) will have an advantage," said Shane Ellis, Iowa State
University Extension livestock economist.
Corn is about two-thirds starch, which ethanol plants convert into fuel. The
remaining nutrients like protein, fat, minerals and vitamins are concentrated into
livestock feed. DDGs come in three forms: wet, 70 percent water; modified, 50
percent water; or dried, 10 percent water. DDGs can't totally replace corn due to
sulfur content.
According to the latest research, feedlots "at the plant," up to six miles away,
replacing 30 percent to 40 percent of corn with DDGs, will earn up to $24 more
per head. Feedlots six to 30 miles away are in the $19 to $20 range. As
transportation costs go up potential savings go down.
Vogel's farm is six miles south of Hawkeye Renewables ethanol facility near
Fairbank, putting him in a advantageous position to feed cattle. It made the
decision to expand his cattle operation so his son could join the family business
that much easier.
Last June the family built a 320-head confinement cattle finishing building.
Depending on the weight and breed, Vogel's cattle feed consists of between 25
percent to 35 percent DDGs. Smaller Holstein steers get less DDGs, while larger
colored cattle like Angus get more because of their feed requirements.
Twice a week, Vogel hops in his dump truck and drives to Hawkeye Renewables
to buy 14 tons of modified DDGs The modified costs half as much as dried, but it
also has a limited useful life --- about 10 days. Dried can be stored almost
indefinitely.
On Tuesday, Hawkeye officials said dried DDGs cost $105 per ton, while
modified was $45 per ton. At $3.50 per bushel, with a bushel weighing 56
pounds, a ton of corn costs $125.
In the year Vogel has been using DDGs, he has been pleased with the results.
His cattle are content, healthy and gaining weight, and he is saving money.
"It's been a good fit. ... The quality is excellent," Vogel said. "It sure hasn't hurt
weight of gain. We recently closed out a group at 3.2 (pounds per day)."
Dale Thoreson, ISU Extension beef specialist for Northeast Iowa, believes Iowa
will make a cattle comeback. Tough environmental regulations, weather and high
feed costs in Iowa three decades ago pushed fat cattle to the South and the High
Plains, where it was cheaper to build facilities and less feed was needed to get
animals through the winter. Feeder cattle were also available to fill lots.
Now, Thoreson said, the tables have turned. Shipping expensive corn south
doesn't make as much sense as locating cattle near the cheapest feed source.
"It looks to me Iowa will have an economic advantage in feed costs where you
don't have to put wheels under it," Thoreson said.
The state probably won't overtake No. 1 Texas, with nearly 3 million head being
fed for slaughter, or No. 2 Nebraska at 2.7 million. But Thoreson thinks Iowa
could move up a notch or two past Colorado and Kansas.
In the last 5.5 years 148 construction permits have been issued for beef
confinements and feedlots in Iowa, according to the Iowa Department of Natural
Resources. Permits are only needed for facilities housing 1,000 head or more.
Thoreson said he has talked to numerous producers planning to build smaller
facilities.
At least two producers in Mitchell County are looking into 800-head buildings,
one in Butler County converting old hog yards to cattle and a couple of others
near Iowa Falls looking to expand, he said. All producers must follow state
environmental regulations.
"I'm very optimistic about the cattle feeding industry," Thoreson said.
There are 28 ethanol facilities operating in Iowa, according to the Iowa
Renewable Fuels Association, with 19 being expanded or under construction. On
average, 100-million-gallon plants, the most common being built, produce about
1,000 tons of DDGs per day.
In Northeast Iowa, plants are operating in Iowa Falls, Steamboat Rock, Fairbank
and Charles City. Facilities are also planned or under construction in St. Ansgar,
Shell Rock and Tama.
Ryan Sauer, DDGs manager for Hawkeye Renewables in Iowa Falls, said DDGs
will always cost less than corn. Price is determined by the cost of corn, natural
gas to dry DDGs and other competitive protein sources.
"As we (ethanol industry) grow, it will be advantageous for other industries to
grow as well," Sauer said. "It's a good product. Guys want to use it."
Contact Matthew Wilde at (319) 291-1579 or matt.wilde@wcfcourier.com.