Future Beef Production
A Model for Iowa
Allen Trenkle
Thoughts
With every problem there is opportunity
Be prepared to take advantage of opportunities
Understand the science
Develop a vision for the beef industry
Prepare yourself to make a contribution
Learn to implement information driven systems
Develop interpersonal skills
"The hardest thing to learn in life is which bridge
to cross and which to burn." (David Russell)
Structure of the Beef Industry
1. The beef industry continues to place value on tradition
2. Remains highly segmented
Seed stock – Cow/calf – Backgrounders – Feedlot – Packers – Retail
- All need to be focused on satisfying the end user: Consumers
3. Slow to change
Poultry and Swine industries vertically integrated
- Will not be extensive total integration of beef production
- Need more coordination of segments of beef industry
Will require individuals with unique talents:
Understanding of the science, vision, people skills,
communication skills, entrepreneurial attitude,
understand how to use information
Issues Facing the Beef Industry
Opportunities for Iowa?
Feed prices and availability
Corn: Ethanol – Export sales
Forage: Competition from dairies
in sections of country
Land: Cost – Increased corn acres
Availability for grazing cattle
Export markets for beef
Markets opening up again
Identified cattle have value
Environmental issues
EPA – Air Quality (dust), Clean water
Land: Production vs. Recreation
National animal identification
Federal requirement – voluntary
Helpful to grow export markets
Private companies developing
Beef quality and safety
National Beef Quality Audit
indicates progress but slow
Instrument grading of carcasses
How to implement and accept?
Concentration in packing industry
Relationship with packers to
develop production contracts
Animal welfare
Role of animals in society
Human resources
Immigration issues – Illegal workers
Packing plants & Feedyards
Training and retention of employees
Diversity of cultures - Community
Changes Occurring in Beef Industry
Increasing beef demand
Up over 20% since 1998
Though current trend is no change or some decline
Increased national emphasis on quality grades
Spread between Choice-Select trending to increase
Movement from commodity to specified products (Still mostly commodity)
There are 45 USDA Certified Beef Programs (Branded Programs)
Increasing consumer demand for “Natural” beef products
Predictability, traceability, integrity
Instrument grading of beef carcasses
Should result in better identification of value and payment for value
Increase in marketing of table ready precooked beef products
Increasing cost of energy (Likely to have the greatest effects)
Greater cost of producing beef
Feed
Transportation
Processing
Location and structure of the industry might change
2005 National Beef Quality Audit
Conducted every five years (Past audits 1991, 1995, 2000)
Improvements during previous 5 years
Improved microbiological safety
Improved cattle genetics of higher quality
Fewer injection-site lesions
Still needing improvement
Lack of uniformity/consistency in quality
Marbling, Tenderness, Palatability, Inconsistency
among & within grades
Beef cuts too large
What could cattlemen do?
Source and age verification (ID system) “INFORMATION”
Increase marbling (Management and genetics)
Where will there be future market growth?
High quality beef
Consumer demand for “Natural” beef products
International markets
What Is Important to End Users of Beef?
Retailers and Consumers
Expectations
1. Value received for investment
Tenderness, Taste, Safety, Nutrition
As economy slows – fewer dollars for high-priced meat
and less eating in high-end restaurants
2. Assurance of proper management and handling of animals
3. Environment protected
4. Trend towards consumer support for local production
Production response
1. Produce safe quality product
2. Implement animal ID and information systems with integrity
3. Smaller production units?
4. New packing industry?
Beef Production in Iowa
Beef cows:
3.2% of U.S. population
Fed cattle marketed: 6.2% of U.S. population (18% 1968-72)
About 50% fed cattle produced in feedlots greater than 1000 head
All cattle feeders in Iowa are farmer-feeders
All grow corn and soybeans
Some feed cattle commercially
Number of small (< 250 head) lots decreasing
Limited packing plant capacity
Excess capacity nationally
Historically Iowa has had lower feed costs
Greater access to co-products from production of biofuels
Iowa vs. Texas
Iowa
Texas (High Plains)
Advantages
1. Natural resources
Highly productive soils
Water (rainfall)
2. Lower cost feed supply
Access to biofuels byproducts
3. High quality cattle
Advantages
1. Established large feedlots
Customer base
2. Established packing industry
3. Infrastructure for support
Capital investment
Land
Organizations as advocates
4. Environment: +/-
Limitations
1. No new packers in Iowa
2. Environmental regulations
3. People attitudes
Accept animal production
Develop new systems
Financial investment
Limitations
1. Limiting water supply
2. Higher feed costs
Transporting byproduct feeds
Growth of Ethanol Industry in Iowa
2500
Currently: 28 plants
2.21 bill. gal (803 mill. bu.)
1500
New: 5 plants
0.47 bill. gal (171mill. bu.)
1000
Closed: 6 plants
0.66 bill. Gal (240 mill. bu.)
500
0
78 80 82 84 86 88 90 92 94 96 98
0
2
4
Year
1.3 bil bu
65% of IA 2 bil bu crop
10.4 mil tons dry DGS
Historically IA corn:
650 mil bu exported
400 mil bu wet milled
20 mil bu milled
200 mil bu ethanol
Feed 60% of crop
6 8
900
800
Million bushels
Million gallons
2000
700
600
500
400
300
200
100
0
78 80 82 84 86 88 90 92 94 96 98
Year
0
2
4
6
8
Ethanol Plants
Feedstock
Corn grain
0.0568 gal ethanol/lb of DM
Biomass
0.0420 gal ethanol/lb of DM
100 MGY plant
Corn grain
35.7 million bu corn (1.0 million ton)
317 thousand ton DGS (90% DM)
895 thousand ton DGS (32% DM)
472,000 cattle (30% DGS)
Possible Consequences of Biofuels
1. Livestock industries remain a competitor for feedstocks
• DGS remain a commodity
• Exacerbate the problems of agriculture
October 12, 2007 – A broad coalition of organizations representing
animal agriculture urge congressional leaders to oppose
increasing RFS for grain-based ethanol
January 8, 2008 – Beef “Should we just accept and adapt to ethanol?”
(Article did not mention any opportunities.)
2. Livestock industries see opportunities to coordinate with production of
biofuels and proactively address some of the issues being raised
• Food and fuel
• Net energy balance of producing biofuels
• Sustainability of biofuels production
Economic
Ecologic
•
Rural economic development
Economic Benefits of an Ethanol Plant
50 MGY Plant in Iowa (2005)
Direct
Indirect
Induced
Total
Output, $
118,648,636
13,301,156
1,546,605
133,496,397
Value added, $
18,405,433
6,011,897
942,326
25,359,656
35
75
23
133
Jobs
Swenson and Eathington, 2006
Economic Impact of 5,000-head Cattle Feedlot
Category
Sales ($)
No. Jobs
Income ($)
11,793,630
10
431,103
Construction
38,693
0.4
16,076
Transportation/warehousing
362,705
2.5
105,331
Utilities
106,278
0.3
22,742
Manufacturing
308,735
0.8
49,266
Retail trade
19,039
0.4
8,855
Finance/insurance/real
estate services
272,384
1.5
62,400
Professional services
207,510
2.4
76,562
Information services
36,043
0.2
9,055
Other services
108,638
1.7
37,917
Government activities
37,300
0.1
8,206
13,290,956
20.4
827,513
Agriculture
Total
John Lawrence, 2006
Feedlot Activity Associated with a 50 MGY
Ethanol Plant
50 MGY @ 2.8 gal/bu = 17.86 million bu corn
@ 16 lbs DGS/bu = 285.7 million lbs DGS dry matter
Cattle in feedlot 600 to 1250 lbs @ feed conversion of 6.1 &
60% of feed intake as DGS
= 2,380 lbs DGS/animal
= 120,000 animals
= 24
5,000-head feedlots (490 jobs vs. 133 with
ethanol plant)
Co-product Feeds Currently Available
Dry Grind Plants
1 bushel corn
2.8 gal ethanol
16 to 17 lbs DGS (DM)
Distillers grains - DG
Wet – 30 to 35% DM
Dry – 90 to 92% DM
Condensed distillers solubles - CDS
Wet – 30 to 32% DM (variable)
Dry – 90 to 92% DM (not readily available)
Distillers grains with solubles – DGS
Wet – 30 to 50% DM
Dry – 90 to 92% DM
Composition of Co-products (% DM)
Co-products from corn are nearly complete feeds
Crude protein
Oil
NDF
ADF
Starch
Ca
P
K
S
DG
30
CDS
18.5
Corn
8.5
10
30
10
15
4.5
2.0
4
10
2.5
1.3
0.06
0.85
1.0
3.8
0.07
1.5
2.2
69
0.02
0.32
0.44
0.4-1.0
1.4
0.12
DGS = about 65% DG + 35% CDS
Effects of Feeding Wet Distillers Grains on Carcass
Measurements – Steers and Heifers
Control
Medium
High
End live wt, lbs
1294
1306
1290
Daily gain, lbs
3.28
3.46
3.31
Carcass wt, lbs
792
806
788
Dressing %
61.1
61.9
61.4
REA, sq in
14.0
14.3
14.0
Backfat, in
0.42
0.44
0.40
KHP, %
2.21
2.34
2.20
Call YG
2.20
2.28
2.12
Calculated YG
2.52
2.58
2.45
AOV: ADG P < 0.04, Dress % P < 0.05
Bonferroni t-test: No significance
Medium: 20 to 28% DGS
High: 40% DGS
Effects of Feeding Wet Distillers Grains on Marbling
Score and Percent Choice – Steers and Heifers
Marbling score
500
% Choice
60
40
400
30
20
350
10
300
0
Control
Medium
High
% USDA Choice
Marbling score
50
450
Analysis of Variance
P < 0.05
Marbling
Control vs. Medium
Control vs. High
*
Medium vs. High
*
% Choice
Control vs. Medium
Control vs. High
*
Medium vs. High
*
Linear Regression
Marbling score P < 0.075
% Choice
P < 0.01
Wet DGS
62 pens of yearling cattle fed 112 to 186 days
Fed control (0), medium (20 or 28), and high (40%) wet DGS
Sensory Evaluation of Steaks from the Strip Loins of
Steers Fed Wet Distillers Grains – Beef Steers
Tenderness
Juiciness
Flavor intensity
Overall
Sensory Panel Score
6.5
6.25
6
5.75
5.5
5.25
5
0
20
% Wet DGS
40
Analysis of Variance
P < 0.05
Tenderness
0 vs. 20
0 vs. 40
20 vs. 40
*
Juiciness
0 vs. 20
0 vs. 40
20 vs. 40
Flavor
0 vs. 20
0 vs. 40
20 vs. 40
Overall
0 vs. 20
0 vs. 40
20 vs. 40
Carcass Value in a Grid Market
Effects of Feeding Wet DGS
Control
1150
Medium
No Significance
High
No Significance
Value, $/head
1125
1100
1075
1050
1025
Steers and Heifers
Steers
Grid: $140/Cwt Choice YG 3
Quality: Prime +$29, CAB +$7, Select -$9, NR -$12
Yield grade: YG 1 +$6.5, YG 2 +$2.5, YG 4 -1$5
Weight: 951-1050 lbs -$18, >1050 -$35, 526-550 -$18, <525 -$30
Ethanol Production in Iowa
Dry-Grind Plants
Are solutions or problems being created?
Current
Production
New
Total
Number of plants
28
5
33
Ethanol, bil gal/yr
2.2
0.47
2.67
Corn used, mil bu/yr
803
171
974
DGS produced, mil ton DM/yr
6.42
1.37
7.79
Cattle inventory neededa
2.93
0.62
3.55
aCould
be feedlot (backgrounding, finish), beef cows, dairy cows,
replacement females. Based on feeding 40 lbs wet DGS/d.
Cattle Can be Fed Differently
Value of Wet Corn Gluten Feed when Replacing Corn, Protein
Supplement and Roughage
% CGF
0
30
50
70
% Ground cobs
23.4
13.4
6.8
0
Gain, lbs/d
2.86
3.36*
3.33*
3.13
Feed DM, lbs/lbs
20.4
21.5*
20.9
19.4*
Feed/gain
7.15
6.40*
6.21*
6.20*
Carcass, lbs
704
768*
758*
745*
Dressing %
60.9
61.8*
61.5
62.0*
Quality grade
6.67
6.30
6.00
6.33
740 lb yearling steers fed 148 days
*P < 0.05
Effects of Feeding Wet Corn Gluten Feed on Carcass
Measurements – Beef Steers
Control
Low
Medium
High
End live wt, lbs
1254
1271
1268
1249
Daily gain, lbs
3.18
3.25
3.24
3.12
Carcass wt, lbs
755
785
775
756
Dressing %
60.1
61.6*
61.0
60.4
REA, sq in
12.8
12.8
12.8
12.7
Backfat, in
0.44
0.50
0.48
0.46
KHP, %
2.06
2.16
2.05
1.94
Call YG
2.58
2.78
2.64
2.55
Calculated YG
2.78
3.08
2.95
2.85
*Dressing %: Low vs. Control P < 0.05
Effects of Feeding Wet Corn Gluten Feed on Marbling
Score and Percent Choice – Beef Steers
% Choice
600
100
500
80
400
60
300
40
200
% USDA Choice
Marbling score
Marbling score
Analysis of Variance
No significance
Regression analysis
Linear - Quadratic
No significance
20
100
0
0
Control
Low
Medium
High
Wet CGF
36 pens of yearling cattle fed 108 to 215 days
Fed control (0), low 30 or 40), medium (50 or 65), and high (90%) wet CGF
Sensory Evaluation of Steaks from the Strip Loins of
Steers Fed Wet Corn Gluten Feed – Beef Steers
Sensory Panel Score
Tenderness
Juiciness
Flavor
Overall
WB shear
7
6.8
6.6
6.4
6.2
6
5.8
5.6
5.4
5.2
5
Analysis of variance
No significance
0
30
50
% Wet CGF
90
Effects of Feeding Wet DGS on Carcass Measurements
Steers and Heifers – Two Experiments (96 head fed each diet)
Wet DGS, % diet DM
0
20
40
60
End live wt, lbs
1238
1249
1230
1251
Daily gain, lbs
3.63
3.73
3.56
3.08
Feed/d, lbs
22.1
22.6
21.4
19.9
Feed/gain
6.19
6.15
6.07
6.48
Carcass wt, lbs
749
762
754
757
REA, sq in
12.7
12.8
12.8
13.0
Backfat, in
0.43
0.46
0.46
0.49
Marbling score
522
526
515
506
Call YG
2.18
2.25
2.31
2.49
Value, $/hd
1163.52
1182.85
1164.84
1141.36
0.55
FEED COST OF GAIN
A. Steers - DGS 1 X price of corn
Control
20% DGS
40% DGS
60% DGS
0.45
Steers Fed Modified DGS
0.40
0.50
C. Steers - DGS 0.70 X price of corn
0.35
0.45
Control
20% DGS
40% DGS
60% DGS
0.30
0.25
0.20
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Corn, $/bu
Feed cost, $/lb gain
Feed cost, $/lb gain
0.50
0.40
0.35
0.30
0.25
0.50
B. Steers - DGS 0.85 X price of corn
0.20
Feed cost, $/lb gain
0.45
Control
20% DGS
40% DGS
60% DGS
0.40
0.15
1.5
2.0
2.5
3.0
3.5
4.0
Corn, $/bu
0.35
Feed cost of gain of 830 lb steers
fed a corn-based diet of modified
DGS (52% DM).
0.30
0.25
0.20
1.5
2.0
2.5
3.0
Corn, $/bu
3.5
4.0
4.5
Feed cost related to price of corn
and DGS (as % of corn price).
4.5
0.60
FEED COST OF GAIN
A. Heifers - DGS 1 X price of corn
Heifers Fed Modified DGS
Control
20% DGS
40% DGS
60% DGS
0.50
0.45
0.50
0.40
C. Heifers - DGS 0.70 X price of corn
0.35
0.45
0.30
0.25
0.20
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Corn, $/bu
0.55
B. Heifers - DGS 0.85 X price of corn
Feed cost, $/lb gain
Control
20% DGS
40% DGS
60% DGS
0.40
0.35
0.30
0.25
0.50
Control
20% DGS
40% DGS
60% DGS
0.45
Feed cost, $/lb gain
Feed cost, $/lb gain
0.55
0.20
1.5
2.0
2.5
3.0
3.5
4.0
Corn, $/bu
0.40
Feed cost of gain of 730 lb heifers
fed a corn-based diet of modified
DGS (52% DM).
0.35
0.30
0.25
0.20
1.5
2.0
2.5
3.0
Corn, $/bu
3.5
4.0
4.5
Feed cost related to price of corn
and DGS (as % of corn price).
4.5
0.60
Control
20% DGS
40% DGS
60% DGS
0.50
0.45
Steers Fed Wet DGS
0.40
0.6
C. Steers - DGS 0.70 X price of corn
0.35
0.25
0.20
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Corn, $/bu
0.60
B. Steers - DGS 0.85 X price of corn
0.55
Feed cost, $/lb gain
.7X vs Col 24
.7X vs Col 25
.7X vs Col 26
.7X vs Col 27
0.5
0.30
0.45
0.4
0.3
0.2
Control
20% DGS
40% DGS
60% DGS
0.50
Feed cost, $/lb gain
Feed cost, $/lb gain
FEED COST OF GAIN
A. Steers - DGS 1 X price of corn
0.55
0.1
1.5
2.0
2.5
3.0
3.5
4.0
Corn, $/bu
0.40
Feed cost of gain of 810 lb steers
fed a corn-based diet of wet
DGS (32% DM).
0.35
0.30
0.25
0.20
1.5
2.0
2.5
3.0
Corn, $/bu
3.5
4.0
4.5
Feed cost related to price of corn
and DGS (as % of corn price).
4.5
0.60
FEED COST OF GAIN
A. Heifers - DGS 1 X price of corn
Heifers Fed Wet DGS
Control
20% DGS
40% DGS
60% DGS
0.50
0.45
0.60
0.40
0.55
0.35
0.30
0.25
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Corn, $/bu
Feed cost, $/lb gain
Feed cost, $/lb gain
0.55
C. Heifers - DGS 0.70 X price of corn
Control
20% DGS
40% DGS
60% DGS
0.50
0.45
0.40
0.35
0.30
0.60
B. Heifers - DGS 0.85 X price of corn
0.25
Feed cost, $/lb gain
0.55
Control
20% DGS
40% DGS
60% DGS
0.50
0.45
0.20
1.5
2.0
2.5
3.0
3.5
4.0
Corn, $/bu
Feed cost of gain of 710 lb heifers
fed a corn-based diet of wet
DGS (32% DM).
0.40
0.35
0.30
Feed cost related to price of corn
and DGS (as % of corn price).
0.25
0.20
1.5
2.0
2.5
3.0
Corn, $/bu
3.5
4.0
4.5
4.5
Future of Beef Industry
Rather than asking: “Should we just accept and adapt to
Ethanol? (Beef magazine, Jan 15, 2008)
Should be asking: “Where are the opportunities?”
Agriculture and the beef industry are currently undergoing
more change than any previous time. Probably not obvious.
Why can’t we take advantage of this opportunity?
It’s Energy, Stupid
Agriculture Energy Balance in a Monoculture
Solar
Fossil energy
Fuel
Gas
Fertilizer
Crops
Grain
Grain products
Heat
• Low ecological sustainability
• Low energetic sustainability
All non-solar energy is imported
• System was economically sustainable when cost
of fossil energy was low
Exported
Agriculture Energy Balance in a Nutrient Recycling System
Solar
Fossil energy
Fuel
Gas
Manure as
fertilizer
Crops
Grain
Grain products
Heat
Livestock
• System requires less input of fossil energy
• System is more ecologically sustainable
- Export primarily carbon
- Recycle N-P-K
• System is more energetically sustainable
Exported
Ethanol
Livestock Prod
Integrating Cattle and Ethanol
Improves Net Energy (Biofuel energy/Petroleum energy)
Net energy, Output/Input
2.5
Benefits
1. Reduced use of commercial
nitrogen fertilizer
2. Greater value of DGS
3. Reduced use of natural gas
2
1.5
1
– Dependent on feeding high
levels of wet DGS to cattle
– Need to feed all DGS locally
0.5
0
Ethanol
Ethanol Ethanol
+ Cattle + Cattle
+ Digester
Future Model
Integrated Livestock and Ethanol Production
Benefits of Manure as Fertilizer
• Stop importing P & K
Corn
Ethanol
Fuel
Oil
• Reduce N imported
DGS
CO2
Algae
Feed Benefits of anaerobic digester
• Reduce use of natural gas
Feedlot
Food
• Conserve manure nutrients
CH4
Identified markets
Limitations
Fertilizer
• Majority of feedlots not
Manure
designed for this system
• Requires extensive
Anaerobic
coordination
Digester
• Anaerobic digesters not well
developed
Energy Information Administration:
Ethanol production increase to 14.6 billion gallons by 2030
93% ethanol from corn grain
Crude oil: $95/barrel
Natural gas: $9.60/103 cubic feet