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Opportunity knocks for Iowa's cattle industry

Agriculture.com Staff 02/05/2016 @ 4:21pm

Its impact on agriculture is being compared to the invention of the steel plow. It is creating an agriculture renaissance in Iowa. Some experts believe it signals a new world for feeding cattle in Iowa.

What is it?

Ethanol. This superhero is expected to help grow the Iowa cattle industry to a level the state hasn’t seen since 1972, the last time it led the nation in beef production.

This is good news for producers as distillers dried grains (DDG), a co-product of ethanol plants, is proving to be an economically and nutritionally greater cattle feed product than corn.

It's cheaper for ethanol plants to ship the co-products to a nearby livestock operation than out of state. Since Iowa has the largest number of plants, experts say it's logical to grow the animal population in that state.

During a meeting on Monday, sponsored by the Iowa Farm Bureau, a huge crowd of cattle producers, bankers, Iowa State University Extension specialists, and others heard industry experts say now is the time to grow Iowa's cattle industry.

Because the state's ethanol capacity is expected to be high enough next year to completely replace gasoline in Iowa, the need for DDG usage is spiking as well.

As of June, Iowa ethanol plants produced 3.0 million tons of DDGs. That number is expected to grow to 8.0 million tons when proposed plants come online.

Historically, between 1968-1972, Iowa was the No. 1 fed cattle marketing state averaging over 4.0 million a year, according to Iowa State University (ISU) statistics.

Currently, Iowa produces 1.5 million fed cattle, between 7%-8% of the U.S. production.

John Lawrence, ISU agriculture economist, said that the economics of using DDGs in a feed ration at 30% provides as much as 100% profitability for producers.

"Research at the University of Nebraska adds $25.00 per head profit by feeding DDGs," Lawrence said. "So, since we've averaged between $20.00-$28.00 per head profit over the last 10 years, and I can add the DDG benefit, that's about a 100% increase in cattle feeding profit."

Dave Fisher, a southern Iowa backgrounder, has been feeding DDGs since 1983.

Every week, Fisher feeds two semi-loads of DDGs to over 1,800 cattle.

"Being able to use a 25-ton semi-load of DDGs a week will be tough for a lot of producers. A cow-calf producer isn't using that much product so they will need to store it," Fisher said.

Though some larger ethanol companies require producers to buy at least a semi-load of product, not all plants hold that policy, industry experts said.

Fisher sees more finishing operations locating themselves closer to these ethanol plants. "I see expansion for many herds. Personally, I expect my operation to take a wait-and-see attitude."

Larry McAllister, a northwest Iowa hog producer, and former cattle producer, said he would be returning to beef production if the economics are there.

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