Impact of ethanol expansion on the cattle feeding industry

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Title: Impact of ethanol expansion on the cattle feeding industry
Author: Daley, Erin
Abstract: The U .S . has a history of producing surplus corn , but the current and projected growth in ethanol production combined with strong feed and export demand is causing an overall increase in corn utilization . Although livestock feeders are projected to remain the largest users of corn , corn utilization can be reduced if ethanol co -products are used to replace a portion of corn in finishing rations . The objective of this study was to determine the economic trade -offs for cattle feeders when facing higher corn prices and increasing supplies of ethanol co -products . A stochastic partial budget model was used to determine the impact on the cost of gain when ethanol co -products are substituted into rations at varying inclusion rates . The model was built for all four major cattle feeding states : Texas , Nebraska , Kansas , and Colorado . Ration scenarios were developed for each state , based on the research results of feedlot nutrition and personal communication with feedlot operators . The various scenarios were simulated to determine the impacts of changing corn prices , corn processing costs , cattle performance , and feeding and transportation costs for Wet Distiller ? ? ? ? ? ?s Grains with Solubles (WDGS ) on the key output variable , cost of gain . The model results indicated when 15 percent WDGS (on a dry matter basis ) replaces a portion of corn and protein supplement , the simulated cost of gain is lower than the base ration scenario when the feedlot is located within 200 miles of ethanol production . When feedlots are located more than 200 miles from an ethanol plant , Dried Distiller ? ? ? ? ? ?s Grains with Solubles (DDGS ) can be fed to lower the cost of gain ; therefore , ethanol co -products can be fed to help offset potential increases in corn prices . The partial budget model is a useful tool for livestock , corn , and ethanol producers who are attempting to determine the impacts of ethanol expansion on corn price and utilization . Policy makers can also benefit from the model analysis as they face decisions in the future regarding ethanol and farm policy alternatives .
URI: http : / /hdl .handle .net /1969 .1 /5926
Date: 2007-09-17

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Impact of ethanol expansion on the cattle feeding industry. Available electronically from http : / /hdl .handle .net /1969 .1 /5926 .

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