No Feed Shortage Looming for Livestock Industry

Amarillo - Jul 9/07 - SNS -- Booming demand for corn from the ethanol sector will not result in livestock feed shortages or push the industry into economic crisis if it simply adjusts to the rising availability of distiller's grains and incorporates them into rations, argues a Texas Agricultural Experiment Station researcher.

"Our concern has been 'Will there be enough feed?'," said Dr. Jim MacDonald, Experiment Station beef cattle nutritionist. "Assuming all the distiller's grains are available for livestock feed, clearly there will be."

But, MacDonald said, the ratio of corn being fed vs. distiller's grains could go from 11-to-1 today to 3-to-1 nationally in the next 10 years. "So we'd better figure out how to feed distiller's grains," he said.

Relatively few distiller's grains are fed in the Southern Plains states now, MacDonald said. Some beef producers are reluctant because there's no incentive and no ready supply.

However, with the opening of two ethanol plants scheduled later this year in the Texas Panhandle, a steady supply of distiller's grains should be available, making the alternative feedstock more attractive. "In the future, as long as it is priced relative to corn, I think there will be a necessity to use this new large pool of feed," MacDonald said.

The proportion of corn used from 2002 to 2006 hasn't changed much in the areas of human consumption, high fructose production or exports, he said.

The biggest change has been corn moving from the livestock-feed sector to the fuel-ethanol sector, MacDonald said. Livestock feed has decreased from 60% to 55% in that time period, while the ethanol fuel sector increased from 8% to 14%.

However, National Corn Growers Association forecasts show that while the percentage has decreased, the actual bushels of corn produced will continue to increase due to higher yields and acres planted, he said.

The acres of corn harvest is expected to rise from the current 71 million to 80-85 million over the next five years, MacDonald said. Yields are projected to rise from about 150 bushels per acre to almost 180 bushels per acre in the next 10 years.

"We're not sure how big the ethanol industry is going to get, but if every plant being proposed as of now gets built, the Renewable Fuels Association says we'll be producing 12.5 billion gallons of ethanol a year from starch," he said.

In estimating feed availability for livestock, MacDonald assumed as much as 15 billion gallons of ethanol being produced annually. At that rate, 35.5% of all corn would be needed for ethanol. This would bring the amount of corn available for feed down from the current 60% to 33.5%, assuming the other categories remain steady.

Because yields are expected to increase, he said the decrease of actual corn fed will not be as dramatic, going from 6.1 billion bushels in 2006 to 5 billion bushels by 2017.

The beef and dairy industries are in the best position of any of the livestock industry to use distiller's grains, MacDonald said.

Based on the number of plants proposed in the Texas High Plains, he estimated feed yards will need to include 15% to 20% of distiller's grains in the diet (moisture-free basis) to use all the available supply.

The two Hereford plants, with a combined 200 million gallons of ethanol production per year, will produce 665,000 tons of distiller's grains, he said. This quantity alone would be enough to include 6% to 7% distiller's grains in the diets of the 5.75 million head of cattle fed in the Texas, New Mexico and Oklahoma region.

If a proportion higher than 20% were included into area feed yard and dairy rations, distiller's grains will need to be railed in from the Midwest, he said.

Growth of the ethanol industry in the Corn Belt has created a greater demand for corn in that area, MacDonald said. However, they now have a large surplus distiller's grains. That could make them cheaper to rail into Texas than whole corn.

"The only thing that keeps this all in balance is our ability to utilize the distiller's grains," MacDonald said. "We still have to go through the learning curve of how to feed them."

In the tri-state area, distiller's grains would be mixed with steam-flaked corn. This is different from in the Midwest, where dry-rolled corn is fed, he said.

Several studies are under way to see how to maximize the use of distiller's grains in the feed yard situation, MacDonald said. Those results should be available later this summer.