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

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

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

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

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

Estimated Feed Cost per Head Wean-Finish, No DDGS SBM $/T $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $150 40.80 45.65 50.50 55.35 60.20 65.05 $175 42.18 47.03 51.88 56.73 61.58 66.43 $200 43.55 48.40 53.25 58.10 62.95 67.80 $225 44.93 49.78 54.63 59.48 64.33 69.18 $250 46.30 51.15 56.00 60.85 65.70 70.55 $275 47.68 52.53 57.38 62.23 67.08 71.93 $300 49.05 53.90 58.75 63.60 68.45 73.30 Corn Price 9.7 Bushels of corn, 110 pounds of 48% SBM, $18/head other costs

Estimated Feed Cost per Head Wean-Finish at $200/T SBM $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 No DDGS 43.55 48.40 53.25 58.10 62.95 67.80 10% $90 43.65 48.03 52.40 56.78 61.15 65.52 10% $80 43.32 47.70 52.07 56.44 60.82 65.19 10% $70 42.99 47.36 51.74 56.11 60.48 64.86 20% $90 43.75 47.66 51.57 55.47 59.38 63.29 20% $80 43.09 47.00 50.91 54.81 58.72 62.63 20% $70 42.43 46.34 50.25 54.15 58.06 61.97 Corn Prices Scenarios DDGS rate and Price

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

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

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

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

Starch Removal Concentrates Other Nutrients 9/18/2018 Source: Dan Loy, ISU

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

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

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

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

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) 9/18/2018 Source: Dan Loy, ISU

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 9/18/2018 Source: Dan Loy, ISU

Effect of level of feeding on energy value of Distillers grains 0 50 100 150 Feeding Value (%of Corn) 0 10 20 30 40 50 % Distillers Grains Based Research at Midwest Universities Almost 1% decrease in energy value fore each 1% increase in inclusion level (Nebraska analysis) Source: Dan Loy, ISU

Evaluation of a low protein, high bran coproduct of ethanol production 0% DBRAN 15% DBRAN 30% DBRAN 45% DBRAN 30% DDGS DMI 25.1 26.8 27.1 26.9 26.3 ADG 3.76 4.02 4.10 4.27 4.01 F/G 6.74 6.72 6.68 6.37 6.62 Calculated NE (% of corn -- 98 101 108 102 Nebraska (2006)—Dakota Bran Cake 9/18/2018 Source: Dan Loy, ISU

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

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 9/18/2018 Source: Dan Loy, ISU

Optimum Use Source: Dan Loy, ISU 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

Optimum Use Source: Dan Loy, ISU 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

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

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

World Changing Again Rising beef demand Emphasis on quality grades 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

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

Fed Cattle Price by State Average Fed Cattle Prices, 1994-2003 Average Months price above Iowa Texas $68.73 60% Colorado $68.71 62% Kansas 57% Nebraska $68.43 50% Iowa $68.52

Iowa’s Cattle Statistics

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

2004-06 Benchmark Close-outs Region Sex Lots Head Carcasses Central Plains Heifers 18,032 2,458,299 1,069,072 Steers 18,759 2,565,051 940,443 High Plains 19,804 2,775,852 1,230,974 27,555 4,226,520 2,044,097 Midwest 2,341 340,290 65,189 5,437 805,458 131,572 North Plains 7,043 1,401,223 501,359 7,375 1,471,460 541,771

2004-06 Benchmark Close-outs In wt Out wt DOF ADFI ADG F/G CP H 692 1,150 156 18.8 2.92 6.52 S 753 1,268 157 20.3 3.26 6.31 HP 652 1,132 178 17.9 2.68 6.72 705 1,250 180 19.1 3.02 6.38 Mid 751 1,205 158 21.3 2.85 7.56 792 1,320 165 22.3 3.18 7.10 NP 717 1,199 162 20.5 2.98 6.93 768 1,305 164 21.4 3.28 6.58

2004-06 Benchmark Close-outs COG VM Death loss HCW DP CP H 0.58 15.02 1.63 741 63.9 S 0.55 13.85 1.51 811 63.8 HP 0.60 15.40 1.77 728 64.0 0.56 13.27 1.62 801 Mid 13.12 1.30 763 63.4 0.51 13.28 1.29 836 63.7 NP 14.47 1.21 754 63.5 0.52 13.82 816

2004-06 Benchmark Close-outs Pr CAB Ch YG4 YG5 Hvy Lt CP H 1.3 7.7 51.3 8.5 1.0 0.6 1.6 S 0.5 5.4 41.6 5.7 4.6 HP 4.7 51.8 6.0 0.9 1.9 3.2 42.3 4.0 0.4 4.3 0.7 Mid 10.5 63.5 10.4 1.4 2.0 0.8 8.3 56.0 9.9 0.2 NP 1.5 57.2 9.4 8.6 49.2 0.3 5.9

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

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

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

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

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

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

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

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?

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

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