Distillers Grains and Livestock Production

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Distillers Grains and Livestock Production
Presented by
John D. Lawrence Iowa State University
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Benefits of Using DDGS in Swine Diets

• Often an economical partial replacement for
• corn
• soybean meal
• dicalcium phosphate
• Large supply available where hogs are produced
• Unique properties
• reduce P excretion in manure
• increase litter size weaned/sow
• gut health benefits

Source Shurson, U of MN
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Maximum Inclusion Rates of New Generation DDGS
in Swine Diets (Based Upon University of
Minnesota Performance Trials)

• Nursery pigs (gt 7 kg)
• Up to 25
• Grow-finish pigs
• Up to 20 (higher levels may reduce pork fat
  quality)
• Gestating sows
• Up to 50
• Lactating sows
• Up to 20

Assumptions no mycotoxins, formulate on a
digestible amino acid and available phosphorus
basis
Source Shurson, U of MN
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Current DDGS Feeding Practices

• Used almost exclusively in grow-finish diets
• 10 inclusion most common
• Gut health benefits frequently observed
• Up to15 to 20 inclusion
• When competitively priced
• Need to supplement with synthetic amino acids
• Limited use in sow feeds
• Perceived risk of mycotoxins
• 10 inclusion when used
• Limited use in nursery feeds
• Lower amino acid content/nutrient density vs
  other ingredients
• Limited formulation space in high nutrient dense
  diets
• 5 inclusion when used

Source Shurson, U of MN
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Challenges or Concerns

• Must be golden brown
• Dark brown is over heated and ties up lysine
• Flow ability
• Pellet quality
• Another bin for storage
• Abrupt changes may put pigs off feed

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Estimated Feed Cost per Head Wean-Finish, No DDGS
SBM /T 1.50 2.00 2.50 3.00 3.50 4.00
150 40.80 45.65 50.50 55.35 60.20 65.05
175 42.18 47.03 51.88 56.73 61.58 66.43
200 43.55 48.40 53.25 58.10 62.95 67.80
225 44.93 49.78 54.63 59.48 64.33 69.18
250 46.30 51.15 56.00 60.85 65.70 70.55
275 47.68 52.53 57.38 62.23 67.08 71.93
300 49.05 53.90 58.75 63.60 68.45 73.30
Corn Price
9.7 Bushels of corn, 110 pounds of 48 SBM,
18/head other costs
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Estimated Feed Cost per Head Wean-Finish at
200/T SBM
1.50 2.00 2.50 3.00 3.50 4.00
No DDGS 43.55 48.40 53.25 58.10 62.95 67.80
10 90 43.65 48.03 52.40 56.78 61.15 65.52
10 80 43.32 47.70 52.07 56.44 60.82 65.19
10 70 42.99 47.36 51.74 56.11 60.48 64.86
20 90 43.75 47.66 51.57 55.47 59.38 63.29
20 80 43.09 47.00 50.91 54.81 58.72 62.63
20 70 42.43 46.34 50.25 54.15 58.06 61.97
Corn Prices Scenarios
DDGS rate and Price
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How Much Distillers Grains Can be Fed to Dairy
Cows?

• Recommend max. of 20 of ration DM
• - 10-13 lb/d of dried
• - 30-40 lb/d of wet
• Usually no palatability problems
• At 30 of DM
• - May decrease DMI, especially if Wet CDG
• - May feed excess protein

Source Shurson, U of MN
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Example Ration Considerations for Dairy Cattle

• Diets containing 5050 forageconcentrate
• - If equal proportions of alfalfa corn silage
• DG can replace most or all protein supplement
• - If mostly corn silage
• More DG can be fed but may need some other
  protein supplement (check Lysine and P levels)
• - If mostly alfalfa
• Less DG likely needed to supply diet CP

Source Shurson, U of MN
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Dairy Ration Economics

• Assuming 2.30 corn, 185 SBM, 25 corn silage,
  45 alfalfa haylage, Limestone 7.25/cwt, DiCal
  20/cwt, 90 DGS
• Feed cost/day/cow at 3 production levels
• DGS 16,000 20,000 24,000
• 0 1.88 2.17 2.45
• 10 1.76 2.06 2.35
• 20 1.68 1.96 2.24
• 30 1.68 1.92 2.16

Source Garcia and Taylor, SDSU
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Distillers Grains in Beef Cowherd and Feedlot
Rations
John D. Lawrence, Director Iowa Beef Center
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Starch Removal Concentrates Other Nutrients
Source Dan Loy, ISU
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Energy of Wet Distillers compared to Corn
Important Fed at levels to meet protein
requirement
Source Dan Loy, ISU
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DGS and Cowherds

• High protein and energy
• Complements low quality forage such as cornstalks
  very well
• Dry DGS can be expensive
• Wet DGS has storage challenge
• Syrup mixed with ground stalks

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DGS and Cowherds

• Potential uses
• Fed on pasture to stretch grass
• Fed on stalks for energy and protein
• Feed TMR with tub-ground stalks
• Bag or bunker with tub-ground stalks
• Creep and weaning ration of calves
• Early weaning or stressed calves because of high
  feed value of DDGS

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DGS and Cowherds

• Current projects
• Stocker cattle on grass with self-feeder
• Developing a pellet/cube with soy hulls and DDGS
  to feed on pasture or stalks
• Evaluating storage methods

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Feed Conversion in Three ISU Experiments where
Wet and Dry DG were compared
5 Improvement Fed at levels of 10-40 of ration.
Trenkle (1996, 1997, 2004)
Source Dan Loy, ISU
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Plains research with corn coproducts

• A recent summary by Cole et al (2006 Plains
  Nutrition Conference) of research from the
  Southern Plains found
• As little as 10 added distillers grains reduced
  performance in steam-flaked corn based rations
• Milo distillers grains is similar to lower in
  energy compared to corn DG
• Corn gluten feed is popular and successful in
  these rations

Source Dan Loy, ISU
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Effect of level of feeding on energy value of
Distillers grains
Feeding Value (of Corn) 0 50 100 150
Based Research at Midwest Universities Almost 1
decrease in energy value fore each 1 increase in
inclusion level (Nebraska analysis)
Source Dan Loy, ISU
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Evaluation of a low protein, high bran coproduct
of ethanol production
0 DBRAN 15 DBRAN 30 DBRAN 45 DBRAN 30 DDGS
DMI 25.1 26.8 27.1 26.9 26.3
ADG 3.76 4.02 4.10 4.27 4.01
F/G 6.74 6.72 6.68 6.37 6.62
Calculated NE ( of corn -- 98 101 108 102
Nebraska (2006)Dakota Bran Cake
Source Dan Loy, ISU
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Challenges

• Storage and handling is more costly
• High levels of feeding management is required
• Bunk management and mixing
• Nutrient balances
• Nutrient (manure) management is more costly

Source Dan Loy, ISU
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Summary of Important Facts about Ethanol
Coproducts

• Distillers grains are superior nutritionally to
  corn grain
• Wet distillers grain are superior to dry
  distillers grains
• Ethanol coproducts work best in Upper Midwest
  Feeding situations
• High levels of distillers grains can be fed if
  economics dictate
• You can add value to distillers grains and still
  produce high quality cattle feed
• Challenges in feeding ethanol coproducts are
  manageable
• Economics will drive use and inclusion levels

Source Dan Loy, ISU
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Optimum Use
Assume 95 of corn price, 0.10/bushel increase
corn price, costs covered, 153 days from Vander
Pol et. al. (2006 Nebraska Research Report)
Source Dan Loy, ISU
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Optimum Use
Assume 75 of corn price, 0.10/bushel increase
corn price, costs covered, 153 days (Calculated
from 2006 U. of Nebraska Analysis)
Source Dan Loy, ISU
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What we need to know about ethanol coproducts

• How much can we feed?
• How different are the nutritional properties of
  specific coproducts (low oil, low protein,
  modified moisture, mixtures)
• Are there feed combinations that work best?
• Can variation in some nutrients be reduced?

Source Dan Loy, ISU
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Iowa Was 1 in Beef

• 1968-1972 1 in fed cattle marketing
• Over 4 million fed cattle per year
• 18 of the US total
• The world changed
• Technology
• Economies of scale
• Irrigation
• Clean Water Act
• Emphasis on lean beef
• Falling consumer demand
• Currently 1.5 million marketings

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World Changing Again

• Rising beef demand
• Up more than 20 since 1998
• Emphasis on quality grades
• Choice-Select spread 2x in 15 years
• Movement from commodity to products
• Predictability, traceability, and integrity
• Cost structure shift
• Coproduct surplus
• Higher energy prices

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Estimated Returns to Feeding Yearling Steers in
Iowa, 1996-2005 (/head)
Average 28.54/head
19.97 20
62 of months positive
30 ROE
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Fed Cattle Price by State
Average Fed Cattle Prices, 1994-2003
Average Months price above Iowa
Texas 68.73 60
Colorado 68.71 62
Kansas 68.71 57
Nebraska 68.43 50
Iowa 68.52
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Iowas Cattle Statistics
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Feedlot Closeouts by Region
Source Land O Lakes, Beef Feed What Can We
Learn
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(No Transcript)
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2004-06 Benchmark Close-outs
Region Sex Lots Head Carcasses
Central Plains Heifers 18,032 2,458,299 1,069,072
Central Plains Steers 18,759 2,565,051 940,443

High Plains Heifers 19,804 2,775,852 1,230,974
High Plains Steers 27,555 4,226,520 2,044,097

Midwest Heifers 2,341 340,290 65,189
Midwest Steers 5,437 805,458 131,572

North Plains Heifers 7,043 1,401,223 501,359
North Plains Steers 7,375 1,471,460 541,771
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2004-06 Benchmark Close-outs
In wt Out wt DOF ADFI ADG F/G
CP H 692 1,150 156 18.8 2.92 6.52
CP S 753 1,268 157 20.3 3.26 6.31

HP H 652 1,132 178 17.9 2.68 6.72
HP S 705 1,250 180 19.1 3.02 6.38

Mid H 751 1,205 158 21.3 2.85 7.56
Mid S 792 1,320 165 22.3 3.18 7.10

NP H 717 1,199 162 20.5 2.98 6.93
NP S 768 1,305 164 21.4 3.28 6.58
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2004-06 Benchmark Close-outs
COG VM Death loss HCW DP
CP H 0.58 15.02 1.63 741 63.9
CP S 0.55 13.85 1.51 811 63.8

HP H 0.60 15.40 1.77 728 64.0
HP S 0.56 13.27 1.62 801 63.9

Mid H 0.55 13.12 1.30 763 63.4
Mid S 0.51 13.28 1.29 836 63.7

NP H 0.55 14.47 1.21 754 63.5
NP S 0.52 13.82 1.29 816 63.5
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2004-06 Benchmark Close-outs
Pr CAB Ch YG4 YG5 Hvy Lt
CP H 1.3 7.7 51.3 8.5 1.0 0.6 1.6
CP S 0.5 5.4 41.6 5.7 0.6 4.6 0.5

HP H 1.3 4.7 51.8 6.0 0.9 0.6 1.9
HP S 0.6 3.2 42.3 4.0 0.4 4.3 0.7

Mid H 3.2 10.5 63.5 10.4 1.4 2.0 0.8
Mid S 1.4 8.3 56.0 8.5 0.9 9.9 0.2

NP H 1.5 10.5 57.2 9.4 0.9 1.4 0.7
NP S 0.7 8.6 49.2 5.7 0.3 5.9 0.4
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The World has Changed, but What is Really
Different?

• Iowa has always been a low feed cost region
• There are no new packers in Iowa
• Water issues in High Plains
• Large professional feedlots are established in
  other regions and have customer base
• Iowa has new feedlot permitting rules

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Matching Cattle to Coproduct

• Plant capacity 45 million gallon
• Gallons/Bu 2.65
• DGS/Bu DM 17 85
• DGS T/day year 395 144,340
• Employees at plant 30-35
• DM /day 20
• Percent of diet 15 30 40
• Head per day 224,089 112,044 84,033
• Employees 124 62 47

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Why Iowa, Why Now?

• Is Iowa competitive in cattle feeding?
• What is YOUR business model and how will YOU beat
  out the competition?
• The existing businesses wont roll over
• How will you bid cattle away from them?
• How will you attract AND KEEP customers

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Alternative Models

• Farmer feeder expansion
• Leverage existing resources and skills
• Low interest loans to upgrade and expand AFO
• What comes first crops or cattle?
• Large enough for a specialist?
• Hire professionals where needed

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Alternative Models

• Keep full agreement to encourage expansion
• Plant owns or partners on cattle in locally owned
  feedlots
• Guarantees X head days a year to help producer
  secure financing to expand
• Feedlot guarantees a market for co-products

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Alternative Models

• Centralized capital/cattle management
• Commercial feeding and professional services
• Professional management and marketing
• Multiple feedyards, existing or new
• Central company may be owned by feedlots, ethanol
  plant, local investors, or independent
• May own cattle as well as manage
• Provide a method for local investment in cattle

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Alternative Models

• Centralized feedlot
• Investor owned feedlot
• Large scale (at least by Iowa standards)
• Cattle may or may not be owned by company

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Am I Competitive Feeding Cattle in Iowa?

• Ethanol expansion has changed economics
• Iowas low cost of gain advantage grows
• Corn prices are expected to be higher in the
  future, but cost of gain cheaper
• Cheap gain is an opportunity not a guarantee
• How will you capture the opportunity?
• What resources and assistance do you need?

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Summary

• Hogs impact depends on price of DDGS relative to
  corn and SBM
• Dairy likely benefit from DGS and can use wet or
  dry
• Beef feedlot clearly benefits from WDGS
• Cowherds Competition for pasture from corn, more
  stalks available, and DGS can help lower feed cost

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Thank you!

• Any Questions?
• www.econ.iastate.edu/faculty/lawrence/