Biofuel co-products as livestock feed - Opportunities and challenges

An assessment of the potential demand for DDGS in Western Canada: institutional and market considerations 479industry in Western Canada being relatively young, most ofthe ethanol producers contacted were unwilling to provideBoaitey with such data. As a result, approximation techniqueswere used to derive the price of wheat DDGS. Thismight affect the validity of some of the conclusions madefrom the time-series analysis, especially regarding the interrelatednessbetween wheat DDGS and prices of barley andcanola meals. The effect of approximation pricing on theleast-cost ration results may not be as significant.Secondly, Boaitey does not incorporate nutrient managementcosts. It indirectly isolates feed costs from othercosts incurred as a result of certain feeding practices. Futurestudies could incorporate these costs to ascertain howconclusions may differ. Any incorporation of nutrient managementcosts in addition to improving the price data forkey feed ingredients, such as wheat DDGS, in future studieswould provide a better understanding of the economicvalue of distillers grain. Furthermore, future research couldconsider the effect of nutrient variability on the conclusionsof the present study.As Table 6 has indicated, the demand for DDGS, ifconsistently used in livestock rations, is greater than theproduction of DDGS by Western Canadian companies.The mandate of the Feed Opportunities from the BiofuelsIndustries (FOBI) research network (www.ddgs.usask.ca)was to investigate the use of DDGS by all livestock sectorsto determine both the biological parameters affected byDDGS and the economics of DDGS use. For the beef sector,research was conducted on inclusion limits and biologicalperformance (Walter et al., 2010). Biological performanceparameters such as average daily gain and feed-to-gainratio, as well as potential negative health impacts suchas liver abscesses, were investigated. No negative healthimpacts were observed at any level of DDGS inclusion.With this data, it becomes possible to fully calculate cost ofproduction, including cost of feed with operational costs.The impact is that higher inclusion rates of DDGS may beaccepted into the diet, even if it increases the length ofstay in the feedlot, given a lower, favourable cost of theingredient.Given that the biological implications of the use ofDDGS are known for the feedlot industry, more research onmarket indicators are required to fully understand how thebeef feedlot industry might utilize domestic wheat DDGS ormaize DDGS imported from the United States. Existing supplierrelationships tend to be very strong, with feedlots continuallypurchasing feed supplies from the same firm. Theability of ethanol plants, be they in Canada or the UnitedStates, to break this strong bond will need to be examinedto determine the full market potential for suppliers ofDDGS-based feed ingredients. While United States maizebasedDDGS products can be cheaply transported by rail tothe feedlot industry in southern Alberta, the requirementfor a transshipment capacity is fundamental, and the fartheraway that a feedlot is from a transshipment point, thegreater the propensity to continue to utilize existing supplyrelationships that are predominantly based on barley grain.Use of DDGS by monogastrics such as poultry and swinewas also investigated in the FOBI research network. Theresearch was not as focused on commercial parameters asthe network’s ruminant research because the use of DDGSas a feed ingredient is not as widespread in monogastrics.Yet, if the quantities of DDGS produced is going to continueto increase with the expansion of the ethanol industry,assessments of impacts on nutrition, health and biologicalperformance will be needed. The FOBI research networkinvestigated the potential to fractionate DDGS. Removal ofthe fibre from DDGS to produce a high-protein concentratewould increase the acceptance of DDGS in monogastricdiets. Although preliminary trials were promising, additionalresearch is necessary to develop a cost-effective method ofseparating fibre from DDGS.The preferred form of co-products for sale by ethanolcompanies is predominantly as wet DGS. However, transportationcosts and storage issues for the co-product in thisform mean that sales of wet DGS only occur within a limitedradius around ethanol facilities. A 50-mile [80 km] radiusis generally accepted in North America as the maximumdistance it is economically feasible to transport wet distillersgrain (Konecny and Jenkins, 2008). However, a studyfrom Australia (Bonnardeaux, 2007) suggests that a 125-mile [200 km] radius is economically viable. Transportingproducts greater distances requires drying the distillersgrain; dryers imply expensive capital and operational costs.Research programmes such as FOBI have explored additionalfractionation technologies, which could potentiallydiversify bio-ethanol facility product lines. However, thecosts of purchasing and developing these new product linesmay be prohibitive.Further research must be done by individual buyersregarding the variability of the DDGS that they purchase.Nuez (2010) and Nuez and Yu (2010) indicate that thereis variability both between batches and between plants inthe quality (protein content and digestibility) of DDGS. Untilindividual plants develop standardized processing parametersand quality assurance programmes, quality must beaddressed by the buyer.CONCLUSIONSWe have shown that the potential annual supply of DDGSfeed ingredients from ethanol plants in Western Canadacould be close to 500 000 tonne, while demand for thesame products could be more than 800 000 tonne more,with a possible demand of 1.4 million tonne of DDGSproducts. The shortfall in supply will have to be filled fromsomewhere, and the logical source would be imported