If the tail sometimes wags the dog, what are the implications for the beef industry as mountains of distillers’ dried grains are produced in the US? Do ethanol refineries attract feedlots? Do beef rations undergo a renovation? Will cattle production change as a result of the availability of a new feed? What does the crystal ball have in store for the cowboy?

Ethanol refinery capacity in the US increases daily and high oil prices will allow it to reach the maximum of 15 billion gallons per year from corn before the 2012 target date. But for every bushel of corn converted into ethanol, there are 17 pounds of distillers’ dried grains (DDGS) that are also produced, and this perishable product has to find a home. The Center for Agricultural and Rural Development (CARD) at Iowa State forecasts 40 million metric tons of DDGS will be produced by 2011, and possibly 88 million metric tons by 2016. The CARD analysis looks at future use of DDGS, its implications for the livestock industry, and the impact of surpluses of DDGS to the ethanol industry.

Within the corn refining industry in 2006, 70% of the ethanol was from dry milling plants and that share will grow, compared to the wet milling industry which produces wet corn gluten. Both products have the starch removed, and the feed is a high protein, highly digestible fiber with fat. They range from wet products with 70% moisture to DDGS with 10% moisture. Wet products can be transported a maximum 300 miles and still be a profitable ration, but many feed lots are locating near ethanol refineries to take advantage of lower transportation cost and the short shelf life of wet distillers grains. The chief objective is to increase the adoption rate of DDGS as a viable feed and to increase the percentage of use in livestock rations. Regarding the latter, University of Illinois researchers have found that up to 50% DDGS in a ration may reduce performance, but can be profitable if the price is right. On the other hand, Iowa State reports 15% to 20% of the ration will meet protein and energy requirements of the cattle, but anytime the net cost is less than corn, there is an incentive to feed beyond the protein requirement.

In 2006 9,400 livestock producers in the Cornbelt told USDA about their use of DDGS and wet distillers’ grains. A that time 36% of feedlots were using them, and another 34% were considering it. The inclusion rate in livestock rations ranged from 11% to 26% in feedlots and 22% to 31% for beef cattle operations. The survey also found that cattlemen not using the ethanol co-products generally cited unavailability of the products. The Iowa State researchers concluded, “Overall, the survey results indicate that, if producers have the economic incentive to feed distillers grains and if product availability, quality, and consistency improve, there is excellent potential for increased use in the U.S. beef industry.”

But what about the nutritional issues? Ethanol refiners are in the business to produce ethanol and their attention is given to that product. Very little attention is given to the quality of any co-products, such as DDGS, particularly nutritional quality.
1) Because of the processing with inexpensive sulfuric acid, high percentages of DDGS in a ration may have a sulfur content beyond the ability of the animal to metabolize it.
2) High fat content in DDGS may also be a limiting factor for feeding DDGS because of its suppression of fiber intake and digestion. Fat is going to be less in corn gluten feed than in DDGS, but both can vary widely in fat content.
3) Phosphorus content will be higher in distillers’ grains than in corn, but the high levels can be offset with calcium, so it can be managed. However, phosphorus becomes an environmental issue around feedlots.
4) Extensive analysis has been reported about the impact of DDGS on beef carcass and meat quality issues. Rations that contain more than 40% DDGS or wet gluten feeds show quality deterioration.

Based on an equitable distribution of distillers’ grains among various livestock species and the export market, the Iowa State researchers say the US beef industry would have to consume 48% of the supply and possibly as much as 62% of the distillers’ grains, both of which are more than nutritional and quality levels allow. To achieve those levels, the beef industry will have to solve the sulfur, fat, phosphorous, and quality issues. One of the solutions is to feed a blend of equal parts of DDGS and wet distillers’ grains, which complement each other, and can become 75% of the total ration without a negative impact on performance.

Another solution to the growing mountain of ethanol co-products is an aggressive development of export markets. That lessens the amount that has to be consumed domestically, but that only amounts to 4-6% increase annually. By 2017, a total of 28% of US production would be exported, compared to 10% in 2006 and 14% in 2007.

Summary:
As more corn is refined into ethanol and more distillers’ grains are produced, the beef industry has the ability to consume the bulk of the supply, but economics will be determined by supply and demand along with nutritional characteristics. More research is needed to address appropriate rations and optimize performance. Economics will also determine whether refiners invest more in the co-products to optimize their value to the consumer.