However, a report by Jacinto F. Fabiosa for the Centre for Agricultural and Rural Development at Iowa State University claims that blaming biofuels is not giving a proportionate view of the market situation.

Dr Jacinto Fabiosa.

In the US, the amount of corn used for fuel alcohol rose 201 per cent from an average of one billion bushels between 2000 and 2007 to three billion bushels in 2007. In this same period, the price of corn doubled from $2.06 a bushel to $4.25 - a rise of 106 per cent

Almost all the increase in corn production during this time was to meet the demand for corn for fuel. The amount that was needed for fuel rose from 10 per cent of total production to 23 per centAt the same time, corn grown for animal feed fell by 11 per cent from 58 per cent of the market.

"Facing a 105 per cent increase in the corn price and a 76.93 per cent increase in the soymeal price, livestock, dairy, and poultry producers had to make adjustments in their production plans," Jacinto Fabiosa says in the report. He is co-director of the Food and Agricultural Policy Research Institute (FAPRI) at the Center for Agricultural and Rural Development at Iowa State University.

Corn Usage
^{Source - USDA, PS&D.}

The sharp rise in biofuel feedstock prices because of the expansion of the industry have been placed at the centre of the food-feed-fuel argument.

"Although it is a competitor in the use of corn, it should not be ignored that the biofuel sector also produces a by-product, distillers grain (DG) that can be used as feed" Dr Fabiosa says.

He adds that more than 81 per cent of the ethanol produced in the US is from a dry milling process and this means that every bushel of corn feedstock can produce 17lbs of distillers grain. Last year this represented 17 per cent of the corn used as feed.

Dr Fabiosa says that the use of distillers grain as a feed is affected by the number of feed compounders and livestock producers who use it in their rations, how much can and should be used in the rations and the amount of other feed ingredients that are removed from the ration to include it - the adoption rate, the maximum inclusion rate and the displacement rate.

The adoption rate is driven by economic considerations so that distillers grain is only used where and when it makes economic sense, although there can be other factors that influence the compounder or producer over whether distiller grain should be use, such a the stability of the product, its ease of storing and handling.

The inclusion rate varies according to species and Dr Fabiosa says that according to several other reports it has been shown that the highest proportion of wet distillers grain to be included in cattle rations is 40 per cent. For dairy cattle, the inclusion rate of dry distiller grain should be 20 per cent as with finishing hogs. For poultry, the maximum dry distiller grain inclusion rate is recommended at 10 per cent.

"Because major feed ingredients such as corn, soymeal, and DG share common nutrients, there is a conflicting claim as to what feed ingredient DG displaces in a feed ration. Some say it is corn for energy while others claim it is soymeal for protein," says Dr Fabiosa.

However, he adds that it is not clear precisely which nutrient is being replaced - energy, protein, minerals or vitamins.

He says that economic factors also have to be included in assessing the use of distillers grain and the nutrient factors play an important role more than just considering crude protein or energy. The balance of nutrients such as amino acids including lysine has to be taken into account to ensure a correct balance in the ration.

Among some of the nutrients a finishing hog needs are 1,501 kcal of metabolizable energy per pound of feed, and the feed ration must contain 0.61 per cent lysine, 0.53 per cent calcium, and 121 IU of vitamin D3 per pound of feed. These nutritional requirements must be satisfied by the optimal feed ration.

Nutritional Recommendations for Swine
^{Source - Holden et al., 1996, and NRC, 1998.}

In the report Dr Fabiosa specifically looks at the displacement rate of distillers grain in hog diets and he says that with ever improving quality of DDGS, newer generation products are coming onto the market with very different nutrient profiles. Some have higher metabolized energy and crude protein and amino acids and the digestibility of these amino acids can be higher in new generation DDGS (nDDGS) than in traditional (tDDGS).

In the case of tDDGS, DDGS substitutes for corn as a main source of energy, and the substitution of soymeal is just a secondary effect because of the availability of other nutrients in tDDGS that can replace nutrients found in soymeal. The optimal displacement rate is 0.75 for corn and 0.08 for soymeal. The substitution rates are 0.82 and 0.83, respectively. The optimal amount of tDDGS included in the optimal ration represents only 7.3 per cent of the ration, far below the 20 per cent maximum allowable inclusion rate.

In the case of nDDGS, the DDGS still substitutes for corn as a main source of energy, and the substitution of soymeal is a secondary effect. However, it will take only a relatively small change either in the prices or the matrix A (or both) for the nDDGS to primarily replace soymeal, with the replacement of corn as a secondary effect. The displacement rate is higher for nDDGS at 0.23 for soymeal and 0.93 for corn. The substitution rates are also higher, at 1.17 and 1.15, respectively. The amount of nDDGS included in the ration reaches the maximum allowable rate of 20 per cent.

Dr Fabiosa says that the price of DDGS tracks the price of corn or soymeal. However, the inclusion of DDGS in a feed ration saves feeder-finisher operations $2.17 per head if tDDGS is used and $8.06 per head if nDDGS is used.

The higher substitution and displacement rates of newer-generation DDGS products can better alleviate the trade-off between food, feed, and fuel in the continuing expansion of biofuels.

Further Reading

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You can view the full report by clicking here.