Producers & marketers find innovative uses for ethanol's improved coproduct

As 2003 approaches, U.S. distillers grains from ethanol production will approach four million tons per year, double the amount produced five years ago
By Tom Bryan | October 01, 2002
The ethanol industry's decision to label distillers grains - in its various forms - a "coproduct" of ethanol production, rather than a "byproduct" of ethanol production, draws a clear reference to its heightened economic importance. The distinction says, "Marketing this pro-duct successfully is necessary to the success of our industry."

And for good reason.

Domestic and foreign sales of distillers grains account for approximately 15 to 20 percent of all U.S. ethanol dry-mill revenue. Today's ethanol plants are utilizing advanced fermentation technologies and improved quality control procedures to produce a higher quality distillers grains. By most accounts, distillers grains is the fastest growing livestock feed in the nation today, with expanding beef and dairy cattle applications and increasingly successful applications in the swine and poultry industries. According to feed reports, distillers grains has been experiencing an annual growth rate of six to eight percent in the cattle industry alone.

As 2003 approaches, U.S. distillers grains from ethanol production will approach 4 million tons per year, double the amount produced five years ago. If the ethanol industry reaches a production capacity of 5 billion gallons per year by 2012, distillers grains production will approach 10 million tons per year.

Of the 3.85 million tons produced currently, about 700,000 tons are exported to countries in the European Union for use in livestock feeds. A small amount of DDGS is exported to Mexico, leaving about 2.8 million tons available for domestic use in the U.S. and Canada.

In it's multiple forms, distillers grains is being marketed as a "high-protein, high-energy" animal feed supplement. Nutritionists say distillers grains contains by-pass proteins believed to be superior to other protein supplements such as cottonseed meal and soybean meal.

In North America, over 80 percent of all marketed distillers grains is used in ruminant diets. Currently, Minnesota is the only state in the U.S. where a significant amount of DDGS is fed to turkeys. Historically, less than one percent of the total annual production is fed to swine, but based upon recent research studies conducted at the University of Minnesota showing excellent nutritional value of DDGS in swine diets, its use is increasing in the pork industry (see Swine & Poultry' section on page 18).

Three forms
Dry-mill ethanol plants create three forms of distillers grains: Distillers Wet Grains (DWG), Distillers Modified Wet Grains (DMWG) and Distillers Dried Grains with Solubles (DDGS), when solubles - fine soluble fiber, fat glycerol, etc. that have been concentrated by the evaporators and incorporated into the distillers grains before drying - are added to the feed. All three forms are frequently referred to as "distillers."

DWG contains approximately 62 to 70 percent moisture. DWG has a shelf life of three days to two weeks and can be sold to farms within the general vicinity of an ethanol plant.

DMWG is DWG that has been dried to approximately 50 percent moisture. DMWG has a slightly longer shelf life of approximately three weeks and is often sold to nearby markets. DDGS is dried to 10 to 12 percent moisture, has an almost infinite shelf life and may be sold and shipped to any market regardless of its vicinity to an ethanol plant. For obvious reasons, DDGS is easier to handle, transport and store than modified and wet distillers grains.

Because of the increased demand for ethanol, the production of disitillers grains is expected to double within the next few years, further increasing the quantity available for use in livestock feeds. Despite concerns, industry analysts say the price of distilers grains has remained relatively constant over the last 10 years. The mid-September selling price was $80 to $126 per ton, a wide range in market value representing the difference between the Midwest and the West Coast - a price disparity due largely to transportation costs.

"With this huge increase in ethanol production, everyone has been waiting for the price of DDGS to go way down," said Charlie Staff, executive director of the Distillers Grains technology Council. "but it's not going down because it is simply a great product with a unique composition. It is, in fact, an exceptional feed."

In addition to swine and poultry applications, dairy and beef cattle production alone holds vast markets that distillers grains has yet to penetrate. Producers are discovering ample opportunity for DDGS marketing on the West Coast, where dairy and beef operators are increasingly using distillers in feeds. California and other West Coast states are experiencing a dramatic increase in dairy production and offer considerable opportunities because the cattle in that region are raised primarily in feedlots. Texas, New Mexico and other Southwestern states (largely beef cattle producers) present another huge market opportunity that is yet to be explored.

Swine & Poultry
Incorporating distillers grains into the swine and poultry industries is proving more challenging than the cattle industry. Nevertheless, extensive research into incorporating distillers grains into the swine diet is being conducted by University of Minnesota nutritionist Dr. Jerry Shurson, who has probably done more than any other researcher to advance the usage of DDGS in non-ruminant diets.

Pigs have not always been fed DDGS, but improved fermentation technology and better dryers in today's new generation ethanol plants are producing a superior product, better suited for swine, according to Shurson.

From one experiment to another over the last five years, Shurson became convinced that the ethanol industry's improved version of DDGS fits very well in swine diets. He is now reportedly researching the value-added properties that appear unique to DDGS. His studies show that DDGS may have a positive impact on ileitis-challenged pigs when fed in combination with antibiotics. The research is an attempt to show that pigs suffering from gut health problems improve or maintain performance levels when DDGS is in the diet.

Phosphorus advantage
As reported in National Hog Farmer in August, as the industry moves toward applying manure based on a phosphorus standard rather than nitrogen, the value of ingredients like DDGS for swine will become much greater.

Fermentation liberates the phytate phosphorus in corn, which makes phosphorus more available to the pig, the report said. At a typical 10 percent inclusion rate for grow-finish, 200 lb. of DDGS, plus 3 lb. of limestone, will replace 177 lb. of corn, 20 lb. of soybean meal and 6 lb. of dicalcium phosphate in a grow-finish diet.

DDGS is suitable for sows as well, according to studies. Gestating animals can receive up to 40 percent DDGS and lactating sows up to 20 percent in the diet.

Producers new to DDGS often feed a conservative five percent diet, which won't provide much impact for reducing inorganic phosphorus or reducing excreted phosphorus, according to Shurson, who has said the 10 percent level makes more sense in terms of reducing phosphorus.

Quality issues
The research of John Goihl, of Agri-Nutrition Services, points out that there can be quality variations in the processing of DDGS, so it's best to buy from a "consistent source." The University of Illinois is doing a large sampling of plants to identify variations due to processing. Goihl has identified the following determining factors of variation in DDGS size, particle size and bulk density: nutrient digestibility, mixing efficiency, amount of ingredient segregation during transport and handling, pellet quality, bulk density, palatability, sorting of meal or mash diets and incidence of gastric ulcers.

Swine market picking upAccording to Steve Markham, senior trader with Commodity Specialists Co., the amount of DDGS fed to pigs has risen from 33,000 tons annually a few years ago to nearly 90,000 tons today. CSC markets DDGS to a hog operation in Minnesota that buys in excess of 800 tons per week, Markham said, adding that he believes more hog farmers will follow suit.