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The ethanol industry provides a lot of valuable livestock feed that opponents have consistently left out of their calculations.

Economy and capital markets

Ethanol’s Feed Products Affect Corn Production Numbers

  • 5/26/2015

Opponents of the ethanol industry frequently claim that 35 – 40 percent of total corn production is used to make ethanol. They believe that this buttresses their argument that ethanol production distorts the market value of corn by increasing demand, and that without ethanol in the equation, corn and other food commodity prices would be much lower.

However, these numbers are based on the assumption that approximately 5 billion bushels of corn are used for ethanol out total production of about 12 – 14 billion bushels. Ethanol opponents say that if we eliminate corn ethanol production, prices would drop dramatically, since almost 35 percent of corn produced would have no market.

Ethanol numbers don’t include feed components

What is missing from these numbers is a full understanding of the products and co-products of the ethanol process. Making ethanol also produces valuable livestock feed components:

  • Thin stillage can be sold directly as livestock feed.
  • Thin stillage can be dehydrated to produce condensed distiller’s solubles (CDS) or “syrup.”
  • Remaining solids after dehydration are called wet distiller’s grains (WDG), which may be sold directly as livestock feed.
  • Further dehydration of WDG produces dried distiller’s grains (DDG).
  • Syrup (CDS) is either sold directly as livestock feed or blended with distiller’s grains to be sold as wet (WDGS; 30 percent dry matter), modified (MDGS; 50 percent DM), or dry (DDGS; 90 percent DM) feed.

A more accurate estimate

According to the Renewable Fuels Association, which tracks ethanol production, during 2014 the ethanol industry consumed about 5.1 billion bushels of corn. This corn was converted into about 14 billion gallons of ethanol and almost 39 million metric tons of livestock feed, or the equivalent of about 1.53 billion bushels of corn — which is almost exactly 30 percent. At a minimum, the estimated amount of corn used exclusively for actual ethanol production should be reduced by 1.53 billion. This yields about 3.57 billion bushels, which is about 25 percent of total 2014 corn production.

The back end

Since this livestock feed contains primarily highly concentrated proteins and other nutrients, we must then estimate the amount of corn with no nutritional value that is needed before it is “pooped” out the back end. Based on conversations with animal nutritionists, this percentage could be zero up to perhaps 50 percent, depending on the animal. If the number is as high as 50 percent, then another 750 million bushels would be subtracted from the ethanol numbers.

This would drop the amount of bushels used for ethanol production down to about 2.8 billion bushels, or about 20 percent of corn production. Therefore, when ethanol opponents say, “ethanol consumes 35 percent of corn production,” it is likely that number is probably much closer to 20 – 25 percent.

Agriculture is complicated

Agriculture is a unique industry, and those making a living in it understand that waste affects profitability. Products and co-products are thoroughly utilized if possible, and often this leads to interconnected products and supply chains. The ethanol industry provides a lot of valuable livestock feed that opponents have consistently left out of their calculations. Critics don’t appear to have a full understanding of the process if they simply measure input without a more sophisticated understanding of the outputs.