Grains for fuel: The economic impact to dairies already felt

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Grains for fuel: The economic impact to dairies already felt

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May 01, 2007

The image of the pebble cast into the pond sending a ring of small waves in all directions is indicative of the impact that rising energy costs have had on all facets of our society.

For dairy farmers, the direct impact was a rise in their fuel charges, in shipping costs for the many products moved on to their farms and the milk that must be transported away.

A less direct effect is now being felt.

The rise in energy costs over the past two years has spurred new interest in alternative fuels. One result is the construction of many facilities across the country to convert grains into fuel.

Two processes are being pursued. One is producing ethanol from corn, and the other is processing oil from soybeans into biodiesel fuel. According to Market Mosaic, a newsletter published by the Mosaic Company, 20 percent of last year's corn crop, and 12 percent of the soybean crop, will be used for fuel production this year.

The impact of this new demand for corn and soybeans already has been felt by the dairy industry. Prices for these ingredients, and for conventional alternatives, have skyrocketed.

Much of the increase to date is speculative because many of the production facilities for these fuels are not yet operating. But whether the price increases are due to actual shortages or to speculation, the dairy producer has experienced escalating feed prices. Much of the relief expected with the rise in milk prices has evaporated by correspondingly high feed bills.

So how does that impact you as a dairy practitioner?

It makes your ability to advise your clients regarding their feeding program all the more important. With the higher cost of conventional feed ingredients, producers will be more willing to consider alternatives, such as bakery waste, chocolate waste, vegetable waste and possibly others. Byproducts such as wet brewer's grains and corn distiller's grains also will get more attention.

The most interesting of these materials is corn distiller's grain, produced as a byproduct of ethanol

As huge amounts of corn are used to produce ethanol, correspondingly large amounts of distillers will be generated.

As the price of corn escalates, the price of distillers is expected to drop. So far, we have seen the former without the latter. Speculation has driven up corn prices, but since many of the ethanol plants are not yet operating, the distillers are by and large not available.

There are, of course, significant differences between corn grain and the byproduct of corn distillers.

The distillers initially are laden with water, and must be dried to make it economical to ship them significant distances.

On a dry-matter basis, they contain much more protein and fat than corn, but very little starch. We are limited in how much we can feed to dairy cows because the fat is unsaturated, and if fed to excess will cause a low-fat milk test and possibly other problems.

An additional process can be used to extract the fat from the distillers, which then yields a product higher yet in protein and very low in fat. This product will fit into rations where the conventional distillers cannot.

Of course, it will command a higher price.

Historically, another problem with distiller's grains is that their nutritional composition varied widely, depending on where they were produced and the exact process used. Therefore, producers often saw an inconsistent response when feeding it. The way to avoid this inconsistency is to test the product regularly and to identify sources that provide a consistent product.

Dairy practitioners need to keep two things in mind when they interact with their clients on the subject of alternative feed ingredients:

  • First, we cannot ignore them, when the cost of traditional feedstuffs skyrockets.
  • Second, cows do not need specific ingredients, such as corn or soybean meal. They need available nutrients, such as amino acids, starch, digestible fiber, minerals and vitamins. We also need to pay attention to the physical form of the ration, so that we not only provide fiber, but effective fiber.

Given these constraints, the actual sources of the nutrients can vary widely, provided they have been subjected to controlled studies and are appropriately tested.