Adjusting to an Ethanol World

8/30/06

Iowa corn processing & ethanol plants, current & planned, 10/26/06 63 Capacity: 129% of 2006 crop

5.5 Bil. Bu. For Ethanol

Livestock Marketing Information Center

Livestock Marketing Information Center

Livestock Marketing Information Center

DDGS Production and Usage Potential productionMil Ton 5.5 Billion Bu. Corn46.8 Potential use 20% % %6.72 Total19.95 Excess for export or use26-27

Situation More ethanol and more DGS Higher corn prices and more corn acres Higher land prices Lower calf and yearling prices Lighter carcasses and fewer Choice

Strengths:Weaknesses: Opportunities: Threats: External Factors Internal Factors

Strengths: Using MIG Close to coproduct Own land Produce corn High equity position Weaknesses: Nearing retirement Sell feeder cattle No facilities or equipment to background or feed coproduct Opportunities: Increasing land prices DGS nearby More corn stalks available Limited herd expansion or contraction Threats: Higher corn prices Lower calf prices Fewer cows will lead to less infrastructure External Factors Internal Factors Case 1

Strengths: Young, long horizon Good nutrition and management skills Facilities and equipment to background and/or feed Packers nearby Weaknesses: High debt level Rent most of pasture Limited labor available Opportunities: DGS nearby More corn stalks available Limited herd expansion or contraction Threats: Higher rental rates Losing pasture to crop production Lower calf prices Fewer cows will lead to less infrastructure External Factors Internal Factors Case 2

Strategies Adopt management intensive grazing Utilize DGS and/or CDS on pasture or in winter feed Convert hay to pasture and use aftermath with DGS/CDS for winter feed Early wean and/or creep feed to run more cows on same acres. Improve grading