WASHINGTON - When VeraSun Energy this week reported a 50 percent increase in second-quarter earnings, part of that boost in profits had nothing to do with selling ethanol.
Distillers grain, a byproduct of the process of making ethanol, is becoming an ever-larger part of those companies' revenue, and some say it can play a key role in limiting the effects of ethanol on food prices.
One-third of all the corn used to make ethanol ends up as an ingredient in feed that farmers in the upper Midwest - where most of the ethanol plants are - give their cattle, poultry and pigs. This year, farmers will feed 18 million metric tons of distillers grain to their animals, up from 2.3 million tons nine years ago. About 1 million tons will be exported to places such as Canada, Mexico, Taiwan and Japan.
VeraSun expects to produce more than 4 million tons of distillers grain this year, company spokesman Bill Honnef said.
"We consider our (distillers grain) sales to be an important part of our overall business," Honnef said.
Some livestock producers, however, say the grain doesn't make up for a steady supply of corn. They also say the feed isn't as good for poultry and some other livestock.
Ethanol producers will use about a quarter of the U.S. corn crop this year. As ethanol plants have boosted their output to meet new federal requirements for ethanol use in the nation's gas supply, so too have they boosted their output of distillers grain.
Historically, distillers grain represented 10 percent of an ethanol plant's revenue stream, said Jerry Shurson, an animal science professor at the University of Minnesota. Today, it's closer to 20 percent to 25 percent, he said.
"Yes, the ethanol plants are using a lot of corn to make ethanol. But they're also delivering a significant quantity of a high-quality feed ingredient back into the industry," Shurson said. "They're essentially taking the starch out and returning what's left to the feed industry."
David Fremark, who operates a feedlot in Miller, said using distillers grain shaves about 25 percent off the cost of his feed bill. Distillers grains typically track corn prices but in recent weeks have been about 20 percent cheaper.
"The animals love it," said Fremark, who's also chairman of the South Dakota Corn Utilization Council. "I don't look at my local ethanol plant as an ethanol plant. It's a feed plant to me."
Cattle and dairy cows, with their four stomachs, seem to benefit the most from distillers grain and last year consumed 84 percent of the nation's supply. Pigs ate 11 percent and poultry 5 percent, according to the Renewable Fuels Association.
Critics say distillers grain is no substitute for a plentiful and inexpensive feed corn supply.
Distillers grain is not readily available in the South and West, and it's too costly to ship there, said Colin Woodall, executive director of legislative affairs for the National Cattlemen's Beef Association. Although many of his members are fans of distillers grain, the group sided with Texas Gov. Rick Perry this year when he sought to exempt his state from the new national ethanol requirement on the grounds it would hurt his state's economy and world food prices.
The U.S. Environmental Protection Agency found the new requirement would have only a small effect on food prices and denied Perry's request.
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WASHINGTON — Ethanol producers will use about a quarter of the U.S. corn crop this year, an amount that alarms ranchers and poultry producers who depend on corn to feed their animals.
As the demand for corn and energy costs climb, so do prices at the grocery store.
But the ethanol industry's impact on the nation's supply of corn for feed isn't as dramatic as it may seem.
One-third of all the corn used to make ethanol ends up as an ingredient in feed that farmers in the upper Midwest — where most of the ethanol plants are located — give their cattle, poultry and pigs.
This year, farmers will feed 18 million metric tons of this ethanol byproduct, called distillers grains, to their animals, up from 2.3 million tons nine years ago. Last year they used 14.6 million tons. About 1 million tons will be exported to places such as Canada, Mexico, Taiwan and Japan.
As ethanol plants have boosted their output to meet new federal requirements for ethanol use in the nation's gas supply, they have also boosted their output of distillers grains, which got their name from the whiskey industry.
"Yes, the ethanol plants are using a lot of corn to make ethanol. But they're also delivering a significant quantity of a high-quality feed ingredient back into the industry," said Jerry Shurson, an animal science professor at the University of Minnesota. "They're essentially taking the starch out and returning what's left to the feed industry."
Grains rarer in South
VeraSun, the nation's largest ethanol producer with 16 plants in eight upper Midwestern states, expects to produce more than 4 million tons of distillers grains this year, spokesman Bill Honnef said.
"We consider our (distillers grains) sales to be an important part of our overall business," Honnef said.
David Fremark, who operates a feedlot in Miller, S.D., said using distillers grains shaves about 25 percent off the cost of his feed bill. Distillers grains typically track corn prices but in recent weeks
have been about 20 percent cheaper.
"The animals love it," he said. "I don't look at my local ethanol plant as an ethanol plant. It's a feed plant to me."
Cattle and dairy cows seem to benefit the most from distillers grains and last year consumed 84 percent of the nation's supply. Pigs ate 11 percent and poultry 5 percent, according to the Renewable Fuels Association.
Critics say distillers grains are no substitute for a plentiful, inexpensive feed corn supply.
Distillers grains are not readily available in the South and West and it's too costly to ship them there, said Colin Woodall, executive director of legislative affairs for the National Cattlemen's Beef Association.
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