UNL Viewpoint

By Terry Klopfenstein

 

 

In 1935, 82 million acres of corn were harvested in the U.S., mostly by hand.

The average yield was 24.2 bushels per acre, totaling two billion bushels. During the next decade, the U.S. became engaged in World War II, which dramatically increased food demand. At the same time, hybrid seed corn was being produced and sold commercially, and Haber-Bosch technology was used to produce nitrogen fertilizer for corn. Because of the “war effort” to produce corn and because of technological developments, corn production exceeded demand.

In 1956, the U.S. government addressed the “farm problem” – too much corn – by encouraging farmers to “Soil Bank” cropland, paying them to not produce corn. Those same farmers realized it was profitable in most cases to feed the cheap corn to cattle, essentially marketing corn through the cattle. Feeding corn to beef cattle produced the high quality beef to which U.S. consumers have become accustomed.

Until 2006, the “farm problem” was too much corn. Cheap corn further encouraged segmentation of cattle feeding into feedlots, separating it from farming. Technological advances have increased corn production by nearly two bushels per acre each year in the last several decades. With growth of the ethanol industry and the anticipated expansion of that industry, the demand for corn has increased.

During the last half of 2006, corn prices increased from about $2 per bushel to above $4 per bushel. With more acres planted to corn and good yields, the price of corn in 2007 declined to between $3 and $3.75 per bushel. However, the price increased to $6 per bushel in early 2008. Therefore, the cattle industry is faced with the prospect of producing cattle under the constraints of high-priced corn after 60 years of “cheap corn.” The “farm problem” has changed from too much corn to a debate of food versus fuel.

Cattle were fed corn, alfalfa and corn silage in Nebraska until the early 1990s. That all changed when MCP built its ethanol plant in Columbus and sold wet corn gluten feed. Cargill followed, as did the dry milling industry. As they say, the rest is history.

Because of the corn and ethanol industries in Nebraska, we are in the enviable position of being able to capture the value of feeding ethanol byproducts, especially in the wet form.

We all firmly believed in Nebraska corn-fed beef. So how could we take the starch out of corn and expect the “byproduct” to produce the kind of performance we achieved with corn? The answer is: It works, but we don’t really understand why.

Surprisingly, wet distiller’s grains with solubles have much higher feeding value than the corn it replaces. At a 35 percent replacement of corn (dry basis), the feeding value of wet distiller’s grains plus solubles has about 35 percent more feeding value than corn.

 We are producing about 1.3 billion gallons of ethanol per year. The byproduct from that production would supply enough to feed all of Nebraska’s cattle at 35 percent of diet dry matter. Of course, some is dried and moved out of the state, but other byproduct enters the state from neighboring states. In our economic calculations, we assumed the byproduct from the 1.3 billion gallons of ethanol was fed wet to Nebraska feedlot cattle.

Dry distiller’s grains averaged 82 percent of the price of corn in 2007. Drying costs may be as low as $10 per ton and as high as $35 per ton, depending on plant heat recovery systems. We assumed the savings in energy and machinery for drying were split evenly between ethanol producers and cattle feeders.

At $5.50 per bushel corn and $35 per ton drying cost, the savings by feeding wet distiller’s grains to Nebraska feedlot cattle would be about $330 million per year. At a drying cost of $10/ton, that drops to $167 million per year. Most of the savings (77-87 percent) would go to the feeding industry.

This represents the potential in Nebraska. Not all byproduct is distiller’s grains; some wet grains are partially dried (modified) and some are completely dried. However, this illustrates the great potential for synergy between corn, ethanol and cattle in Nebraska. Y By Terry Klopfenstein, professor of ruminant nutrition, Institute of Agriculture and Natural Resources, University of Nebraska-Lincoln