Agriculture Online
06-05-06
Opportunity knocks for Iowa's cattle industry
By Mike McGinnis
Agriculture Online Markets Editor
Its impact on agriculture is being compared to the invention of the steel plow. It is
creating an agriculture renaissance in Iowa. Some experts believe it signals a
new world for feeding cattle in Iowa.
What is it?
Ethanol. This superhero is expected to help grow the Iowa cattle industry to a
level the state hasn_t seen since 1972, the last time it led the nation in beef
production.
This is good news for producers as distillers dried grains (DDG), a co-product of
ethanol plants, is proving to be an economically and nutritionally greater cattle
feed product than corn.
It's cheaper for ethanol plants to ship the co-products to a nearby livestock
operation than out of state. Since Iowa has the largest number of plants, experts
say it's logical to grow the animal population in that state.
During a meeting on Monday, sponsored by the Iowa Farm Bureau, a huge
crowd of cattle producers, bankers, Iowa State University Extension
specialists, and others heard industry experts say now is the time to grow Iowa's
cattle industry.
Because the state's ethanol capacity is expected to be high enough next year to
completely replace gasoline in Iowa, the need for DDG usage is spiking as well.
As of June, Iowa ethanol plants produced 3.0 million tons of DDGs. That number
is expected to grow to 8.0 million tons when proposed plants come online.
Historically, between 1968-1972, Iowa was the No. 1 fed cattle marketing state
averaging over 4.0 million a year, according to Iowa State University (ISU)
statistics.
Currently, Iowa produces 1.5 million fed cattle, between 7%-8% of the U.S.
production.
John Lawrence, ISU agriculture economist, said that the economics of using
DDGs in a feed ration at 30% provides as much as 100% profitability for
producers.
"Research at the University of Nebraska adds $25.00 per head profit by feeding
DDGs," Lawrence said. "So, since we've averaged between $20.00-$28.00 per
head profit over the last 10 years, and I can add the DDG benefit, that's about a
100% increase in cattle feeding profit."
Dave Fisher, a southern Iowa backgrounder, has been feeding DDGs since
1983.
Every week, Fisher feeds two semi-loads of DDGs to over 1,800 cattle.
"Being able to use a 25-ton semi-load of DDGs a week will be tough for a lot of
producers. A cow-calf producer isn't using that much product so they will need to
store it," Fisher said.
Though some larger ethanol companies require producers to buy at least a semiload of product, not all plants hold that policy, industry experts said.
Fisher sees more finishing operations locating themselves closer to these
ethanol plants. "I see expansion for many herds. Personally, I expect my
operation to take a wait-and-see attitude."
Larry McAllister, a northwest Iowa hog producer, and former cattle producer, said
he would be returning to beef production if the economics are there.
"If it's possible Iowa can compete with the High Plains areas, based on feed cost
savings, I'm interested in learning more," McAllister said.
Because of Iowa's cold climate, McAllister said the DDGs cost savings would
have to cover building confinement facilities.
"I believe cattle weighing between 900-1,400 pounds should have a roof over
their head and not out fighting the elements," McAllister said.
If the Iowa cattle industry grows, another question that needs to be answered is
will the meatpacking industry grow in Iowa.
"You're going to have a lot of misplaced packers in the Plains or misplaced cattle
in Iowa, McAllister said. "Because, I don't see the packing capacity anywhere
close that would take care of this many cattle."
"You're going to have a lot of misplaced packers in the Plains or misplaced cattle
in Iowa, McAllister said. "Because, I don't see the packing capacity anywhere
close that would take care of this many cattle."