With the expansion of the U.S. ethanol industry and higher prices for corn, a reduced share of the corn crop is used directly for domestic livestock feeding. However, a coproduct of ethanol production, distillers grains, may substitute for corn in some livestock rations, particularly for beef and dairy cattle. Cattle feedlots located close to an ethanol plant will benefit from a steady supply of distillers grains.
Meanwhile, distillers grains are less suitable in poultry and hog rations. The divergent effects of ethanol expansion on the different categories of livestock and in different regions of the country could result in structural changes in some parts of the U.S. livestock sector. For each 56-pound bushel of corn used in the production of ethanol, about 17.5 pounds of dried distillers grains are produced.
The use of distillers grains in livestock feeding and their overall substitution for direct corn feed use in the projections reflect a number of important underlying assumptions.
• The projections assume that 75 percent of distillers grains is used in domestic livestock sector feeding. Exports of distillers grains are assumed to account for 10 percent of production. The remaining 15 percent of production is assumed to go to other nonfeed, domestic uses.
• Of the portion of distillers grains used for domestic livestock feeding, 80 percent is assumed to be used for beef cattle, 10 percent for dairy, and 5 percent each for poultry and hogs. These assumptions reflect the relatively easier use of distillers grains by ruminants compared to monogastric animals. The high usage by beef cattle also reflects the ability of those animals to use the wet form of distillers grains.
• Based on the animal nutrition studies listed below, distillers grains on a dry matter basis are assumed to replace corn in rations of beef cattle pound for pound; dairy rations, 1 pound distillers grains for 0.45 pound corn; hog rations, 1 pound distillers grains for 0.85 pound corn; and poultry rations, 1 pound distillers grains for 0.55 pound corn. For each animal type, other ration components are adjusted to rebalance the ration. Protein adjustments affect soybean meal feeding for hogs, poultry, and dairy cattle. Most distillers grains used for cattle feeding displace urea as the protein source rather than soybean meal.
Using these assumptions, each bushel of corn used to produce ethanol results in a reduction of about a fifth of a bushel of direct corn feeding due to the use of distillers grains in rations. Since beef cattle are assumed to be the largest users of distillers grains, only a small offset is expected in soybean meal use.