The U.S. ethanol industry will continue to grow in 2009, creating a substantial increase in the supply of distillers dried grains with solubles (DDGS), according to presenters at the 2008 International Distillers Grains Conference and Trade Show held Oct. 19-21 in Indianapolis, Ind.

More than 700 attendees heard how ethanol production increased in 2008 by approximately 3 billion gallons to 9.3 billion gallons. Even more critically, Informa Economics predicts ethanol production to reach 11.9 billion gallons in 2009.

According to Ken Hobbie, USGC president and CEO, roughly 33 percent of the grain going into U.S. ethanol production will come out as DDGS. “The reason we’re holding this conference is because we are confident the U.S. ethanol industry will continue to grow due to efforts undertaken by the National Corn Growers Association and state producer organizations over the last several years,” Hobbie said. “Due to the efforts of U.S. growers to establish the ethanol industry, we made DDGS our top priority in 2006 and since then have seen DDGS exports exceed 2 million metric tons annually.”

Bruce Rastetter, CEO of Hawkeye Renewables, told more than 140 international participants to expect growth in ethanol production and a substantial increase in DDGS production.

“Who would have believed five years ago that the ethanol industry would be the largest supplier of energy in this country? That will happen by the conclusion of 2009,” Rastetter said. Senior Vice President of Informa Economics Scott Richman said as a result of the growth in the U.S. ethanol industry seen this year, 22.8 million tons of DDGS were available for global use in 2007/2008 marketing year, nearly a 50 percent increase from the 2006/2007 marketing year. He said the 2008/2009 marketing year, which began Oct. 1, will likely experience an additional 50 percent increase in the availability of DDGS, reaching 31.3 million tons.

“There will be a substantial amount of DDGS available for global livestock industries,” Richman said. “It looks like we are going to be pushing more DDGS into export markets.”

DDGS: Equal in performance, lower in cost
USGC Director in Egypt Dr. Hussein Soliman presented new research showing that DDGS as a feed ingredient for livestock and poultry is equal in performance to regular animal feed while providing producers a better economic value. Over the past year, the U.S. Grains Council office in Egypt conducted several DDGS feeding trials in the dairy, beef and poultry sectors. Several inclusion ratios integrated at multiple stages of development helped producers pinpoint the proper DDGS feeding ratios to maximize their farming operations.

The results in poultry showed that a 5 to 10 percent DDGS inclusion in the starter, growers and finished diets performed as well as those of the control group’s rations in terms of mortality, feed intake, daily weight gains and feed conversions, all the while reducing feed cost by approximately 1 to 4 percent. Given a ration with 15 percent DDGS inclusion, dairy and beef buffalo performance showed similar results to that of the control group in terms of milk production and feed intake while improving daily weight gain and reducing feed cost by 3 percent.

“In a time when production costs continue to increase, it is important to cut costs whenever and wherever possible,” Soliman said. “DDGS is an excellent feed ingredient that helps produce a better product at a more economic price.” From September 2007 to August 2008, Egypt has imported 31,308 metric tons of U.S. DDGS, which is a 100 percent increase from the previous year. Soliman said he believes the feeding trials will result in imports of DDGS up to 200,000 metric tons in five years’ time, compared to 91,000 tons Egypt has imported from 2006 to now.

Council promotional efforts and feeding trials do not go unrecognized, Soliman noted, evidenced by two new commercial Holstein dairy operations that have started using DDGS at a 12 to 15 percent ration inclusion rate.

“The U.S. has great market potential here in Egypt. It will be our mission to see U.S. farmers capitalize on this opportunity.”

Mexico likely to remain No. 1 buyer of U.S. DDGS
Mexico currently holds the title as the number one purchaser of U.S. DDGS, importing 708,000 metric tons in the 2007 calendar year. Canada follows in second place, importing 317,580 tons last year. In the first nine months of 2008, Mexico has already imported nearly 700,000 tons.

Julio Hernandez, U.S. Grains Council director in Mexico and Central America, presented at the council’s International Distillers Grains Conference (IDGC) in Indianapolis, Indiana, in October, to answer a common question: How far can we push the No. 1 market? Hernandez said his native country is not near its maximum utilization of the co-product. He said Mexico has the potential in the foreseeable future to import as much as 4 million tons of distillers grains.

“This is a very realistic potential,” Hernandez said. “However, the current financial crisis will represent a slowing in growth of Mexico’s livestock and poultry industries, but we are confident this will not last long.”

The poultry industry is the strongest sector in Mexico, demanding the greatest amount of feed ingredients. An increase in broiler capacity has occurred in the last three years and a steady continuation of this trend is anticipated. Hernandez calculates Mexico’s poultry sector to eventually import 1.1 million tons. In addition, the beef sector has the potential to use 1 million tons; dairy 890,000 tons; and swine 788,000 tons. He said the U.S. Grains Council will also explore promoting distillers grains beyond the livestock and poultry industries in an effort to maximize profitability for agribusinesses and U.S. farmers.

“We see great potential for DDGS outside the typical markets. The aquaculture and pet food industries are two examples of sectors that have great potential in terms of incorporating DDGS,” he said. “The council is currently conducting a study to better understand these businesses. Mexico has a lot of room for growth. Don’t rule us out yet.” PD

Mike Deering
Director of Communications
U.S. Grains Council MDeering@grains.org