Distillers Grains and Livestock Production

1. Distillers Grains and Livestock Production Presented by John D. Lawrence Iowa State University

2. 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

3. Maximum Inclusion Rates of “New Generation” DDGS in Swine Diets (Based Upon University of Minnesota Performance Trials) • Nursery pigs (> 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

4. 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

5. 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

6. Estimated Feed Cost per Head Wean-Finish, No DDGS Corn Price 9.7 Bushels of corn, 110 pounds of 48% SBM, $18/head other costs

7. Estimated Feed Cost per Head Wean-Finish at $200/T SBM Corn Prices Scenarios DDGS rate and Price

8. How Much Distiller’s 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

9. Example Ration Considerations for Dairy Cattle Diets containing 50:50 forage:concentrate - 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

10. 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

11. Distillers Grains in Beef Cowherd and Feedlot Rations John D. Lawrence, Director Iowa Beef Center

12. Starch Removal Concentrates Other Nutrients Source: Dan Loy, ISU

13. Energy of Wet Distillers compared to Corn Important: Fed at levels to meet protein requirement Source: Dan Loy, ISU

14. 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

15. 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

16. 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

17. 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

18. 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

19. 0 10 20 30 40 50 % Distillers Grains 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

20. Evaluation of a low protein, high bran coproduct of ethanol production Nebraska (2006)—Dakota Bran Cake Source: Dan Loy, ISU

21. 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

22. 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

23. At Plant 30 Miles 60 Miles 100 Miles 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

24. At Plant 30 Miles 60 Miles 100 Miles 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

25. 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

26. 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

27. 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

28. Estimated Returns to Feeding Yearling Steers in Iowa, 1996-2005 ($/head) Average $28.54/head $19.97 20% 62% of months positive 30% ROE

29. Fed Cattle Price by State Average Fed Cattle Prices, 1994-2003

30. Iowa’s Cattle Statistics

31. Feedlot Closeouts by Region Source: Land O Lakes, Beef Feed “What Can We Learn”

33. 2004-06 Benchmark Close-outs

34. 2004-06 Benchmark Close-outs

35. 2004-06 Benchmark Close-outs

36. 2004-06 Benchmark Close-outs

37. 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

38. 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

39. 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 won’t roll over • How will you bid cattle away from them? • How will you attract AND KEEP customers

40. 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

41. 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

42. 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

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

44. Am I Competitive Feeding Cattle in Iowa? • Ethanol expansion has changed economics • Iowa’s 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?

45. 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

46. Thank you! Any Questions? www.econ.iastate.edu/faculty/lawrence/