In the last few years, the decrease in co-product price, particularly for wet distillers grains plus solubles (WDGS), during the late summer months has provided incentive for producers to purchase co-products and store it to feed at a later date. Although co-product prices in 2008 didn’t drop as much as the historical seasonals would have suggested for the late summer, storage opportunities may still exist for cattle feeders and cow/calf operations. Previous research has identified a number of ways to store ethanol co-products. Most of these involve storage in “ag bags” or similar silage-type bags or in bunker silos constructed from cement or hay bales. In order to pack the co-product for storage in these structures, it is typically mixed with some type of inexpensive roughage (e.g., ground wheat straw). Recipes for mixing co-products for storage vary according to the type of co-product, the moisture content, and the type of storage. Details for physically mixing and storing co-products are available in the Storage of Wet Corn Co-Products Manual.
From an economic perspective, ethanol co-products are a viable substitute for corn as WDGS and modified wet distillers grains plus solubles (MWDGS) generally are priced less than corn (on a dry matter basis). This discount to corn price typically is greatest during the summer months when co-products are in ample supply. Further, the storage of ethanol co-products allows small operations to utilize appropriate quantities of the feedstuff relative to the size of the operation and also acts as a natural procurement and price hedge for any type of operation because it becomes an owned commodity.
Storage of co-products involves several costs that vary depending on the storage method used. In addition to the cost of purchasing the co-product itself, producers must also consider the costs of machinery and labor, storage structure costs, transportation, interest, shrink, and other factors when making decisions to store co-products. Producers must also evaluate which of the storage methods best fits their operation. In order for storage to generate a positive return, the benefits of storing the co-product (the cost savings) must exceed the actual costs of storage. Producers can use Co-Product STORE—Storage To Optimize Ration Expenses—to quantify the costs of co-product storage. This interactive spreadsheet allows producers to analyze and evaluate specific storage scenarios in response to changing market conditions using different storage methods. Co-Product STORE is organized into four steps (Parameter Assumptions, Feed Costs, Equipment and Structure Costs, and Other Costs) and includes a results summary which reports costs and tonnage values for the total storage mixture and co-product alone. Two storage examples (bunker and silo bag) are evaluated as examples to illustrate how the spreadsheet estimates storage costs.
Co-Product STORE is available to download free of charge on the UNL Beef Production website. Go to http://beef.unl.edu and click on the “byproduct feeds” tab. Also visit the UNL Beef Production website for video illustrating mixing and packing techniques for wet co-product storage techniques. For several presentations related to feeding stored ethanol co-products, go to Bioenergy, Renewable Alternatives, UNL web site.
Source: Nebraska Ag Extension