US - Renewable fuels are altering the geography of the US beef sector as northern Corn Belt feedlots expand to capitalise on ethanol by-products as a cattle feed.
Proximity to ethanol plants is allowing northern farmers to utilise Distillers Dried Grains and Solubles (DDGS) easily, as haulage distances are short.
This means DDGS can be fed wet and expensive drying procedures can be avoided.
Furthermore, the protein rich DDGS feed provides an additional option to corn and sorghum which, when fed without DDGS, requires steam-flaking to aid digestion.
The ability for northern feeders to source DDGS cheaply is reversing the trend seen by the US beef industry thirty years ago, when the industry headed south and larger commercial feedlots became established across Nebraska and down towards Texas.
Supply economics are also influencing this decision as concurrent US droughts and greater global demand has led to market volatility and cash corn prices of over $6/bushel average last year and $7/bushel through 2013.
Currently, this is placing some of the smaller northern feedlots at a slight advantage, according to Professor Kevin Dhuyvetter, Farm Management Specialist, Kansas State University.
“Big feedlots have traditionally bought corn and grain sorghum and steam-flaked it by adding water and mashing it into a flake, aiding digestibility,” said Professor Dhuyvetter. “Historically, this has put big feedlots of 40,000 or more cattle at an advantage as they could buy their own steam-flake processor.”
However, current research suggests the benefits of steam flaking corn are not as great as when feeding wet distiller’s grains, putting farmers that can source DDGS at an advantage, he added.
Professor Dhuyvetter studied the phenomena of commercial feedlot sector growth through the seventies and early eighties and the subsequent move away from northern farmer-feeders to areas like Kansas.
He noted that because of milder winters, economies of scale and the ability to purchase feed processors, the feedlot heartland became focused around Texas, Nebraska and Kansas.
“Some thirty years ago we transferred our industry away from the Corn Belt and now we are seeing a certain trend for movement back to the Corn Belt where trucking wet ethanol by-products can be done cheaply,” said Professor Dhuyvetter.
“As we use more corn for ethanol, feedlots close to ethanol plants have a geographical advantage. Typically, these northern feedlots are not as big as those in Kansas or Texas but are expanding to capture the benefits of scale.”
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