Cattle, corn contribute to ethanol bonanza

Source: By ART HOVEY/Lincoln Journal Star • Posted: Wednesday, October 31, 2012

The economic bounce that comes from the combination of corn and cattle in Nebraska “is unmatched any other place in the country,” agricultural economist Bruce Johnson told the Nebraska Ethanol Board on Tuesday.

And the distillers grain that is left over from making ethanol at the state’s two dozen ethanol plants is a big part of that picture, the University of Nebraska faculty member said at the board’s October meeting in Lincoln.

Even though Texas regularly leads the nation in numbers of cattle on feed, NU research shows that Nebraska feedlots save as much as $10 per hundredweight compared to Texas in getting steers and heifers to market weight.

Johnson used much of his time as featured speaker gauging the effect of ethanol on the state’s economy. It adds up to about $3.4 billion per year in direct receipts and $4.54 billion when the multiplier effect on other businesses is taken into account.

In the job sector, the ethanol industry directly employs almost 3,000 workers and the direct effect and spin-off effect add up to about 10,950 jobs overall.

Nebraska’s twin towers status — typically second in cattle on feed nationally and second to Iowa in ethanol production — largely is responsible for uplifting results, Johnson said.

Two keys in the cattle-distillers grain equation, Johnson said, are that distillers grain is available close to cattle feeding operations and that it can be transported wet. It can be fed before it goes out of condition and transporting water weight isn’t a significant cost over short distances.

In contrast, Texas producers face longer hauls and higher transportation costs in miles, plus the drying costs that are necessary to reduce weight per unit and prevent the feed from spoiling.

That could contribute to a shift in beef production in Nebraska’s direction over time, Johnson said.

Similar results could be seen with dairy, compared to California and its feed challenges.

Johnson called attention to Nebraska’s annual production of about 236 million tons of distillers grain and consumption of about 100 million tons at livestock operations within its borders.

That leaves about 136 million tons of a dried product often referred to as DDGs available for use elsewhere in the United States and overseas.

One area of growing export potential is China, which sends mountains of retail merchandise to the United States and is looking for something to take back in shipping containers. Alfalfa bales are another prospect for the return trip.

China recently pushed past Mexico as the second most common export destination for distillers grain behind Canada. “They’re shipping out DDGs in empty containers, too,” Johnson said.