How Biofuel Production Helps Livestock Producers

Joanna Schroeder

The Midwest has finally been getting rain, but not in time to reverse the state of the corn crop due to the nationwide drought. Yet, biofuel producers are still helping livestock producers says Monte Shaw, Executive Director of the Iowa Renewable Fuels Association (IRFA). Because of ethanol production, there is a larger corn crop and more flexible supply than ever available during other drought periods.

The recent USDA report confirms what the agricultural and biofuels industry already knew – that the drought’s impact on supply and price will be felt by corn consumers around the world. Shaw added, “Yet, the ag sector has seen droughts before, and it will survive again. This is a time when all of agriculture should pull together. Unfortunately, national livestock trade associations have chosen to politicize the on-going drought as part of their multi-year effort to return corn prices to $2 per bushel. At times like this, it is important to look past the rhetoric to the facts.”

During the American Coalition 25th Annual Ethanol Conference, Cindy Zimmerman sat down with Shaw to discuss the call for a waiver of the Renewable Fuel Standard (RFS) with many of the calls coming from the livestock industry. They also discussed 10 ways ethanol producers are helping livestock producers during this tough time.

Monte Shaw interview at ACE conference

“In particular ethanol helps the farmer-feeders. We have a better price of corn. It makes them more competitive against the integrators,” explained Shaw. “But then we also have the distillers grains. And if you think about it, we planted 95 million acres of corn this year instead of 75 million because of ethanol. So yes, we’re taking a nasty hit from this drought and this is going to cause pain among all corn users, but we’re going to have a much bigger crop than we would have otherwise.”

“And then the ethanol industry returns that 20 million additional acres of protein goes straight to the livestock industry. So we have 20 additional acres of protein that would not be out in the market, the feed market, if it weren’t for the ethanol industry,” he added.
According to Shaw, ethanol production provides multiple benefits to Midwestern livestock producers:

1. The ethanol industry has driven the production of a larger corn crop. Simply put, there is more corn to go around.

2. The ethanol industry will bear the brunt of any rationing stemming from the drought. Without ethanol, the smaller corn harvest (yield and acres) would have to be rationed solely by livestock producers (domestic or export customers).

3. Due to ethanol demand, seed companies spent much more than they would have otherwise on research and development over the last decade. As a result, farmers have access to seed varieties with greater yields that can withstand the drought much better than in prior years, like 1988.

4. Maintaining the RFS sends a market signal to world farmers (including those in South America who will be planting soon) and U.S. farmers not to reduce corn acres. Conversely, lowering the threshold for waiving the RFS would send a market signal that renewable fuels are not a reliable market and corn acres planted would be reduced – ultimately hurting the livestock groups asking for such a waiver.

5. One-third of every bushel of corn processed into ethanol returns to the livestock feed supply in the form of distillers grains – including all of the protein, fat, fiber and other nutrients. Only the starch portion of the kernel is used to produce ethanol. Last year the amount of distillers grains produced was more than the total amount of grain consumed by all the beef cattle in American feedlots.

6. As the nutritious feed portions of the corn kernel are concentrated, distillers grains are a more efficient source of energy and protein than the ingredients they are replacing in livestock diets. Distillers grains provide approximately 130-150% of the energy of an equivalent amount of corn when fed to beef cattle. This allows for the use of cheap roughage (corn stalks, soybean straw) to be used in livestock diets.

7. Without distillers grains, the cost of cattle and hog rations in the Midwest would go up as distillers grains and roughage are replaced with expensive corn and soybean meal.

8. The drought has negatively impacted much pasture land. Without ample grass, cows may be unable to nurse their calves for the traditional 200-day period.

9. Distillers grains improve weight gains despite external factors, such as hot, dry weather.

10. Distillers grains provide an economic source of energy, amino acids and phosphorus for hog diets.

For more information on how ethanol producers are helping livestock farmers, click here.

ACE, Agribusiness, Audio, Corn, Ethanol