Biofuel co-products as livestock feed - Opportunities and challenges

10Biofuel co-products as livestock feed – Opportunities and challengesfor vegetable oil for biodiesel results in larger supplies ofoilseed meal for livestock feed and, in turn, lower prices.The results of the Centrec work were confirmed in2011 in an economic analysis conducted by IHS GlobalInsight (2011) that analysed United States and internationalfeedstock supplies, projected petroleum pricing, edible oildemand, and energy policy to estimate potential biodieselindustry growth in the United States. Potential acreageshifts, commodity price impacts, and global trade effectswere also examined. The analysis demonstrated a significantdecrease in soybean meal values due to increasedoilseed production.Aside from the effect of substituting relatively lowercostfeed co-products from biofuels production for traditionalfeedstuffs, the modest impacts of expanded biofuelsproduction on the livestock sector can be partially explainedby steadily increasing supplies of food and feed crops. Thatis, the global grain and oilseed supply has grown substantiallyin recent years, such that increased use of thesecommodities for biofuels production has not led to reducedavailability for feed or feed use.As an example, the global grain supply (wheat, rice,maize, sorghum, barley, oats, rye, millet and mixed grains)totalled 2 423 million tonne in 2005/06. Grain use forethanol and co-product production was 54 million tonneon a gross basis in 2005/06 (F.O. Licht, 2011), meaning2 369 million tonne of grain remained available for usesother than ethanol and feed co-products. By comparison,the global grain supply was a record 2 686 million tonnein 2009/10. Grain use for ethanol and co-products totalled143 million tonne in 2009/10, meaning 2 543 million tonneof grain were available for non-ethanol uses. Thus, thesupply of grain available for non-ethanol uses (i.e. grainremaining after accounting for grain use for ethanol) grew7 percent between 2005/06 and 2009/10. Further, thesupply of grain ethanol feed co-products grew 268 percentduring this period. The combined supply of grain fornon-ethanol use and ethanol feed co-products totalled2 586 million tonne in 2009/10, compared with 2 386 milliontonne in 2005/06. Figure 5 shows recent growth in theglobal grain supply relative to grain use for ethanol andfeed co-product production.The amount of grain available for uses other than ethanolproduction is expected to grow more significantly in thelong term, as grain use for ethanol moderates in accordancewith slowing national mandates.BIOFUELS AND CO-PRODUCT OUTLOOK TO2020Market factors and government policies are expected tocontinue to support expanded biofuels production anduse in the long term. Growth in grain and oilseed usefor biofuels is expected to be maintained or acceleratedFIGURE 5Global grain supply in relation to grain use for ethanoland animal feed co-product productionMillion Tonnes2 5002 0001 5001 000500005/06 06/07 07/08 08/09 09/10 10/11Grain Use for Ethanol, Net Co-product ProductionEthanol Feed Co-Product ProductionGlobal Grain Supply Available for Non-Ethanol UseSource: USDA data; F.O. Licht, 2011in some nations or blocs throughout the decade. In theEU, for instance, USDA (2011) projects biodiesel productionwill increase 22 percent and ethanol production willincrease more than 40 percent by 2020 in response to biofuelsblending mandates. Further, USDA projects Brazilianethanol production will increase 45 percent by 2020, largelybecause of stronger expected export demand. Ethanol andbiodiesel production increases from traditional feedstocksare also projected in Canada and Argentina.However, growth in the use of certain agricultural commoditiesas biofuels feedstocks is expected to moderatein the next 10 years in some other nations. For example,USDA projects maize use for ethanol in the United Stateswill be 128 million tonne in 2011/12, but will grow onlygradually (1 percent per year) to 140 million tonne by2020/21 (USDA, 2011). There are two major reasons for theexpected slower rate of growth in the use of agriculturalfeedstocks for biofuels in the United States and some othernations. First, government policies in several nations placerestrictions on the amount of agricultural commodities thatmay be used for biofuels. For example, the United States’RFS caps the amount of maize starch ethanol that canqualify for the mandate at a maximum of 57 billion litres(15 billion gallons) per year beginning in 2015. Similarly,China recently imposed regulations to limit grain ethanolproduction to current levels, effectively restricting anyfurther growth in grain use for ethanol (USDA, 2011). Thesecond reason for moderation in the growth in the use ofagricultural commodities for biofuels is the expectation thatfuture growth in biofuels production will primarily comefrom new feedstocks that currently have no or limited applicationin the animal feed market, such as perennial grasses(switch grass, miscanthus), agricultural residues (maize