Are lower fat DDGs still economical?

Fat content as low as four percent | Less fat means less energy, but the price remains steady

Lower fat content in corn-based dried distillers grains imported by Canadian livestock feeders has caught many by surprise.

Feed suppliers and feedlot operators who use the ethanol production byproduct have become accustomed to DDG fat content of 10 to 12 percent and have based their rations on that level.

Energy content provided by fat is key to growth and finishing rations, along with protein.

However, American ethanol plants are extracting more oil from DDGs, lowering fat to as little as four percent, but more commonly anywhere from six to eight percent.

Randy Ives, director of ethanol services for Gavilon, a grain, fertilizer and energy company from the United States, said ethanol plants are extracting additional fat from their corn byproducts for use in biodiesel production.

“We started in 2005 to pull some of the corn oil out of the distillers (grains) at the ethanol plants, on the back end using centrifuges,” he said.

“The last two years, it has really picked up the pace. The plants have started making the investments, and close to 90 percent of the plants will have the equipment installed by the end of 2013.”

Ives told a recent Lethbridge meeting that traditional fat levels in DDGs are a thing of the past.

Poet, one of the largest U.S. ethanol producers, can reduce its DDG fat content to four percent. Plants in Indiana and Ohio can reduce it (to)six percent, “and I’m not sure they’ll stop there,” said Ives.

Plants in Canadian border states, where most prairie customers get their supply, are also expected to reduce fat content in DDGs, he added.

Less energy content in the feed should mean a lower price, right?

Wrong, said Ives.

The lower-fat DDG price has remained stable and in some cases is higher because less fat is desirable in dairy rations and those for livestock other than beef cattle.

“There’s more to distillers than just fat,” said Ives. “Distillers is a protein. Distillers is an energy. It’s a combination product.”

Lynda Martell, a nutritionist with Masterfeeds, was among those surprised by the lower fat-same price scenario.

The Canadian feed company develops rations for livestock producers in five provinces.

“My immediate concern would be a decrease in fat would equate to a decrease in energy of the product,” said Martell.

“Historically, we use DDGs in diets for energy and protein, so in theory, a decrease in fat should equal a decrease in energy, and then at that point, does it become cost effective to still continue to use?”

The fat or energy content of feed is a far greater concern than protein in the Lethbridge area, which is the centre of Canada’s cattle feeding industry.

The region grows high-protein barley, and additional protein sources including canola meal and pulses are also readily available.

DDG prices tend to follow corn, and price is always the primary factor in deciding whether to import and use DDGs in cattle feeding rations.

Several speakers at the Lethbridge meeting noted the 20 percent drop in Canadian imports of DDGs last year, which came on the heels of a 20 percent drop in 2011.

That 40 percent reduction has U.S. ethanol interests eager to encourage a turn-around.

Canada is still the third largest importer of U.S. DDGs, behind China and Mexico.

However, Mexico has also drastically reduced its imports and bought 26 percent less product in 2012.

Reducing the fat content in DDGs could lead to further reductions. However, feeding studies show a reduction in fat content in a ration does not mean an equivalent loss in production.

“It’s not a linear equation,” said Ives. “There’s some tradeoffs that have to be yet figured out. We don’t have all the right answers. We’re learning.”

Martell said additional research will be key to Masterfeeds’ planning. Lower fat means a higher percentage of crude protein in feed, and the value of that crude protein must be determined.

“The nutrient profiles that are in place in our balancing programs are based on the higher fat product so it appears we’re going to have to adjust our nutrient values … and what values do we assign?” she said.

“Most of my diets are based on distillers grains at 10 percent fat so now we’re down to eight percent fat and moving lower, so we need to have a better handle on those particular ingredients and what the nutrient content really is.”

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