Biofuels will continue to drive feed prices

There is no question the No. 1 factor (driving the future of the livestock and feed industries) is the availability and cost of feed.

And, says Joel Newman, American Feed Industry Association (AFIA) president and CEO, while the subset of challenges affecting feed cost and availability are many, the No. 1 driver is biofuels.

Don’t expect that to change, says Robert Wisner, Iowa State University emeritus professor and Extension grain marketing specialist.

Wisner headed a team of economists to produce a report, commissioned by AFIA, on the future patterns of U.S. grains, biofuels and livestock feeding.

The future will look much like the recent past. “We expect current U.S. ethanol and biodiesel policies and mandates prescribed through 2022 by the 2007 Energy Independence and Security Act will remain in effect,” according to the report, released this month.

However, while corn starch-based ethanol has been the main reason for higher feed prices and a corresponding reduction in cattle numbers, other biofuels may replace it to challenge cattlemen in the future.

Those two challenges are de-oiled distillers grains (DGS) and biobutanol.

“De-oiled DGS is a relatively new development stemming largely from government blending mandates for biodiesel and advanced biofuels,” the report summary says. “As advanced biofuels mandates increase in the next 10 years, greater production of de-oiled or partially de-oiled DGS is almost certain.”

How that will affect cattlemen is in the nutritional composition of what’s left over. Should de-oiled DGS become common place, the nutritional makeup of the remaining feedstock will require ration changes to compensate for the lost energy.

Then there’s biobutanol. “In the mid-term, we’re keeping our eyes very closely on the development of biobutanol, because that could take the corn-based industry beyond the blend wall and create a second surge of increased production,” Newman says.