Agriculture Online
06-23-06
Ethanol plants a blessing and a curse for cattle industry
Mike McGinnis
Markets Editor
Cattle lots like this one in Southwest Iowa could benefit from inexpensive, highly
nutritious feed from local ethanol plants. However, those plants will likely raise
the price of corn, which may prompt some cattle producers to switch to corn
production.
Using distillers' grains, a co-product of Ethanol production, as a feed additive has
sparked interest in growing the cattle industry in the Upper Midwest, experts told
a group of cattlemen in Shenandoah, Iowa, on Thursday.
A large group of both cow/calf and feedlot operators were told the nutritional and
economical benefits of feeding dried distillers' grain (DDG) to their cattle.
For ethanol plants, like the 50-million-gallon facility being built in this southwest
Iowa town, it's beneficial to sell the co-product locally instead of having to ship it
to different parts of the country.
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Therefore, the opportunity is there for increased feedlots and larger cow/calf
operations.
Dan Loy, Iowa State University professor of animal science, said cattle
operators can take advantage of a feed additive that is priced right and provides
higher energy levels than corn. "The nutrient composition of DDG contains more
protein, fat, nitrogen and fiber than feeding corn," he said.
Bernard Fisher, a southwest Iowa cow/calf producer with about 50 head, said this
is a learning process for him. Fisher sees the cost and availability of the DDG
peaking his interest.
"The concern we have is the handling of the product and storing of it," Fisher told
Agriculture Online. "That's going to be the trick, to handle DDG in a small enough
quantity for a guy like me with just 50 cows."
Fisher added, "I'm at this meeting trying to figure out just how much I would use.
"Whether I can use one ton a day or what. I just don't know."
During the calving stage, a cow weighing between 1,300-1,400 pounds needs
between 6-8 pounds of DDG per day, Loy said. At weaning, the cow should
receive 1-2 pounds of DDG per day, and 3-5 pounds during the late gestation
period.
That ration application would cost the producer about $0.72 per day. From 19942003, a cost-of-feeding study using corn was estimated at $1.01 per day,
according to University of Nebraska statistics.
"You can see that DDG are pretty competitive," Loy said.
Not all cow/calf producers were optimistic about the advantages of feeding DDG.
"I would love to increase my herd, but my well is only going to pump out so much
water," one cattleman said. "These experts here today are not selling water."
He added, "As a smaller producer, I want to be able to buy DDG in pellet form. I
can't handle a whole truckload."
Because of its soft texture, DDG don't take the form of a pellet very well, experts
said.
"You have to add other types of feed to make DDG pelletable," Loy said.
For the cow/calf producer, Darrell Busby, ISU Extension field specialist, pointed
out that DDG is economically competitive with pasture.
"Four pounds of DDG replaces 6.8 pounds of grass for a 1,300-pound cow,"
Busby said.
With so much DDG being produced, ethanol plants are relying on feedlots to use
the bulk of the co-product.
Brent Lorimor, who operates a large southwest Iowa feedlot, said his operation
size is determined by how much DDG he can truck in.
At capacity, Lorimor uses 35 tons of DDG every 2 1/2 to 3 days.
"Any future expansion will be dictated by how much we can get trucked in,"
Lorimor said. "The wet distillers' has changed a lot of what we do. It's very
forgiving, we can feed different levels of it in a ration. We don't have nutritional
problems anymore."
Lorimor mixes DDG with cornstalks and says, "It's a tremendous feed. When you
look at it, we use the manure for fertilizer, we grow the crop, we feed the crop to
the cattle, and the cattle produce the manure again for fertilizer. It's a cycle that
has been there for 200 years -- we're just rethinking it."
Meanwhile, the demand for corn for ethanol is changing the face of Iowa's grain
production. In Iowa, 55 plants either in production or set to come online will need
1.19 billion bushels of corn, according to ISU statistics. Iowa produces nearly 2.2
billion bushels per year.
In the U.S., 75% of U.S. corn production will soon be needed for ethanol
processing.
Because many livestock producers are also grain farmers, expected higher corn
prices from ethanol's demand could push them toward converting more pasture
land into corn acres.
"If corn prices get to $3.00 it will be more profitable for me to raise corn than
cattle on my land," Fisher said. "So, the ethanol plants may drive me out of the
cattle business."
John Lawrence, Iowa State University Extension, agreed the impacts of a
growing ethanol industry are yet to be seen. "There's no question the market is
trying to buy corn acres," he said. "The acres will have to come from CRP land,
soybean acres, buffer strips, or pasture."