Rick Paskal is looking around his Picture Butte, Alta., cattle feeding businesses for some advantages that will keep him and his neighbours competitive with their Midwest American counterparts.
“I’m not finding that competitive edge we’ve had,” Paskal said.
“I am finding government policies regarding ethanol that are interfering with the (livestock) marketplace.”
Paskal, like cattle feeders in Texas, Colorado and Nebraska, is seeing new investment in cattle feeding being made in states such as Illinois, Iowa, Missouri and Minnesota.
University of Nebraska agricultural economist Darrell Mark said the rapid expansion of the American ethanol industry is shifting the geographic location of livestock feeding.
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“There are about 115 operating ethanol plants now, mostly in the corn belt. There is something like 85 under construction of the 300 that have been announced. Most of those are in the corn belt and nearly all are bigger than the ones that are already running,” he said.
“They all will be producing distillers grains as a byproduct and somebody will have to feed those DGs to some livestock,” he said.
Ethanol’s need for raw fuel sources has pushed corn prices to $3.70 US per bushel. In response, American farmers say they intend to plant a post-war record of 90 million acres in 2007.
The United States Department of Agriculture and Kansas State University estimate that food, alcohol and industrial uses will account for 39 percent of production this year, up from about 20 percent in the 1990s and 26 percent in 2003.
Mark said the competition for corn in sectors other than livestock is creating cost problems for producers.
“The answer may come in the form of DGs, wet or dry, but it won’t come this year. And over the long haul, investment will tend to move to areas where the feedstock, DGs, are being produced,” he said.
Paskal said U.S. government production subsidies of 15 cents per litre of ethanol will do great things for American agriculture, especially in the Midwest.
“But it makes it pretty hard to compete against the U.S. treasury if our federal government doesn’t match those policies. Our federal government isn’t matching it so we aren’t getting the same level of ethanol development,” he said.
“This is great for corn farmers, good for cattle feeders, pig and poultry growers. But only in the U.S. and the closer they are to ethanol plants, the better. Not good for cattle feeders in Texas and Alberta,” he said.
KSU and the USDA estimate that 3.5 billion bu. of corn will be run through American stills this year.
“Southern Minnesota, Iowa: they’ll be awash in distillers grains by 2010. And that will make livestock feeding out there hard to compete with,” said Paskal.
Brad Wildeman feeds cattle with wet distillers grain at Lanigan, Sask.
“I don’t think we’ll see a wholesale move of cattle feeding in Texas and Nebraska to the Midwest, but it definitely will make that region a tough competitor when it comes to bidding on (feeder) calves,” he said.
Lower humidity, lower land prices, lower population density and less restrictive environmental rules gradually shifted livestock feeding out of the U.S. corn belt 20 years ago, he said.
“And gradually we’ll see new investments made near this new feed source,” said Wildeman.
Environmental issues will keep many large intensive livestock operations from being built in corn country, but that doesn’t mean feeding won’t be expanding there, added Dillon Fuez of Utah State University.
“Every little farm feedlot that has a permit to operate, but was worn out and shut down over the past 30 years, is getting rebuilt with state of art technology,” said Fuez.
“It’s the 1,000 to 5,000 head cattle feedlots that are being brought back on line. And we understand there are a lot of them.”
Fuez and Wildeman agree that over time, shipping of dried distillers grains will replace corn in cattle rations outside of the Midwest.
Mark said Nebraska’s cattle feeding industry currently imports wet and dry DGs and he expects that practice to continue.
Fuez said he expects that feed research will put DGs into pasture supplements and add feed value to poor forages.
