CORN ? Remember When We Fed it to Pigs?

April 27, 2006 — 

Livestock producers should start paying attention to the legislative debate occurring at the federal and state levels regarding the future of corn usage in the US. Actually, it's not much of a debate at this point. Livestock uses for corn are not getting much attention as legislators aggressively promote the development of corn-based ethanol production as the cure for the country's fuel needs.

A recent article in the Chicago Mercantile Exchange's Daily Livestock Report (DLR) by Steve Meyer and Len Steiner cited some projections developed by the Food and Agriculture Policy Research Institute (FAPRI) at the University of Missouri which estimated that the usage of corn for fuel ethanol will reach 2.65 billion bushels by 2015 in response to the federal government's 7.7 billion gallon renewable fuels mandate. The projection also assumes that corn availability for feed will be constant at 6 billion bushels.

A key part of the economic equation is how to dispose of the by-products of the ethanol manufacturing process, principally dried distillers grains (DDGs). The process produces approximately 17 pounds of DDGs for each bushel of corn processed. DDGs can be fed to livestock to supplement soybeans or corn up to a point. The by-product can be used at much higher concentrations in beef and dairy rations then in swine or poultry diets. The quality and consistency of DDGs is also highly variable making it difficult to formulate rations. In addition, there are some pork quality concerns regarding fat deposition to contend with. Of interest to livestock producers is the cost associated with replacing higher priced grain with supplemental by-products.

FAPRI projects corn prices averaging $2.20 to $2.35 per bushel between now and 2015 as compared to $2.05 or less in 5 of the last 7 years. This estimate assumes the growth in ethanol production increases at the current projected rate, livestock numbers do not increase and corn acres remain the same. Changes in these or other factors (such as drought) could result in still higher corn prices. Any way you cut it, corn is likely to become an increasingly expense ingredient for livestock feed.

Source:
CME Daily Livestock Report, April 26, 2006