Hostname: page-component-cd9895bd7-jn8rn Total loading time: 0 Render date: 2024-12-18T14:44:10.887Z Has data issue: false hasContentIssue false
  • English
  • Français

Implications of Growing Biofuel Demands on Northeast Livestock Feed Costs

Published online by Cambridge University Press:  15 September 2016

Todd M. Schmit ,
Leslie Verteramo  and
William G. Tomek
Todd M. Schmit
Affiliation:
Department of Applied Economics and Management at Cornell University in Ithaca, New York
Leslie Verteramo
Affiliation:
Department of Applied Economics and Management at Cornell University in Ithaca, New York
William G. Tomek
Affiliation:
Department of Applied Economics and Management at Cornell University in Ithaca, New York
Get access Rights & Permissions [Opens in a new window]

Abstract

The relationship between complete-feed prices and ingredient prices is estimated in order to analyze the effect of higher commodity prices on feed costs, with particular attention paid to the substitutability of corn distillers dried grains with solubles (DDGS). Using the historical price correlation between corn and DDGS, each $1 per ton increase in the price of corn increases feed costs between $0.45 and $0.59 per ton across livestock sectors. Marginal feed costs based on lower forecasted price correlations are reduced between $0.05 to $0.12 per ton across livestock sectors, but only for the dairy ration is the reduction statistically significant. Overall, DDGS cost savings are relatively limited and insufficient to offset the impact of other higher-priced feedstocks.

Keywords

biofuelscommodity pricesdistillers dried grains with solubleslivestock feed costs
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 38 , Issue 2 , October 2009 , pp. 200 - 212
Copyright
Copyright © 2009 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anderson, J.D., and Trapp, J.N. 2000. “The Dynamics of Feeder Cattle Market Responses to Corn Price Change.” Journal of Agricultural and Applied Economics 32(3): 493–505.Google Scholar
Boyles, S. 2007. “Thin Stillage and Corn Distillers Solubles.” In Ohio Beef Cattle Newsletter, No. 551, Ohio State University Extension Beef Team (August 29).Google Scholar
Chase, L.E. 2006. “Considerations for Using Distillers Grains in Dairy Rations.” Working paper, Department of Animal Science, Cornell University, Ithaca, NY.Google Scholar
Coffey, B.K. 2001. “An Analysis of the Effects of Feed Ingredient Price Risk on the Selection of Minimum Cost Backgrounding Feed Rations.” Journal of Agricultural and Applied Economics 33(2): 353–365.Google Scholar
Elobeid, A., Tokgoz, S., Hayes, D.J., Babcock, B.A., and Hart, C.E. 2006. “The Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors: A Preliminary Assessment.” CARD Briefing Paper No. 06-BP 49, Center for Agricultural and Rural Development (CARD), Iowa State University, Ames, IA.Google Scholar
English, B.C., De La Torre Ugarte, D.G., Jensen, K., Hell-winckel, C., Menard, J., Wilson, B., Roberts, R., and Walsh, M. 2007. “25% Renewable Energy for the United States by 2025: Agricultural and Economic Impacts.” Staff Report, Department of Agricultural Economics, University of Tennessee, Knoxville, TN.Google Scholar
FAPRI [see Food and Agricultural Policy Research Institute].Google Scholar
Feedstuffs. 1986–2008. Feedstuffs (a weekly newspaper for agribusiness), the Miller Publishing Company, Minnetonka, MN (various issues).Google Scholar
Ferris, J. 2006. “Modeling the U.S. Domestic Livestock Feed Sector in a Period of Rapidly Expanding By-Product Feed Supplies from Ethanol Production.” Staff Paper No. 2006-34, Department of Agricultural Economics, Michigan State University, East Lansing, MI.Google Scholar
Food and Agricultural Policy Research Institute (FAPRI). 2005. “Implications of Increased Ethanol Production for U.S. Agriculture.” FAPRI-UMC Report No. 10-05, Iowa State University and University of Missouri-Columbia.Google Scholar
Food and Agricultural Policy Research Institute (FAPRI). 2007. “FAPRI 2007 U.S. and World Agricultural Outlook.” FAPRI Staff Report No. 07-FSR, Iowa State University and University of Missouri-Columbia.Google Scholar
Food and Agricultural Policy Research Institute (FAPRI). 2008. “FAPRI 2007 U.S. and World Agricultural Outlook.” FAPRI Staff Report 08-FSR 1, Iowa State University and University of Missouri-Columbia.Google Scholar
Hadrich, J.C., Wolf, C.A., Black, J.R., and Harsh, S.B. 2008. “Incorporating Environmentally Compliant Manure Nutrient Disposal Costs into Least-Cost Livestock Ration Formulation.” Journal of Agricultural and Applied Economics 40(1): 287–300.Google Scholar
Heady, E., and Candler, W. 1958. Linear Programming Methods. Ames, IA: Iowa State University Press.Google Scholar
Judge, G.G., Hill, R.C., Griffiths, W.E., Lutkepohl, H., and Lee, T.-C. 1988. Introduction to the Theory and Practice of Econometrics (2nd ed.). New York: John Wiley and Sons.Google Scholar
Kwiatkowski, J.R., McAloon, A.J., Taylor, F., and Johnston, D.B. 2006. “Modeling the Process and Costs of Fuel Ethanol Production by the Corn Dry-Grind Process.” Industrial Crops and Products 23(3): 288–296.Google Scholar
Loy, D. 2007. “How Much Distillers’ Grains Can I Feed?” In Ethanol Feeds—Feeding Distillers Grains to Beef Cattle, Iowa Beef Center, Iowa State University, Ames, IA.Google Scholar
Rajagopalan, S., Ponnampalam, E., McCalla, D., and Stowers, M. 2005. “Enhancing Profitability of Dry Mill Ethanol Plants: Process Modeling and Economics of Conversion of Degermed Defibered Corn to Ethanol.” Applied Biochemistry and Biotechnology 120(1): 37–50.CrossRefGoogle Scholar
Rausch, K.D., and Belyea, R.L. 2005. “Coproducts from Bio-processing of Corn.” Paper No. 057041, American Society of Agricultural Engineers Annual Meeting, Tampa, FL (July 17-20).Google Scholar
Schmit, T.M., Boisvert, R.N., Enahoro, D., and Chase, L. 2008. “Dairy Farm Management Adjustments to Biofuels-Induced Changes in Agricultural Markets.” Working Paper No. 2008-16, Department of Applied Economics and Management, Cornell University, Ithaca, NY.Google Scholar
Schmit, T.M., and Knoblauch, W. 1995. “The Impact of Nutrient Loading Restrictions on Dairy Farm Profitability.” Journal of Dairy Science 78(6): 1267–1281.Google Scholar
Shapouri, H., and Gallagher, P. 2005. “USDA's 2002 Ethanol Cost of Production Survey.” Agricultural Economic Report No. 841, Office of the Chief Economist, U.S. Department of Agriculture, Washington, D.C.Google Scholar
Shurson, J., and Noll, S. 2005. “Feed Alternative Uses for DDGS.” Department of Animal Science, University of Minnesota, St. Paul, MN. Presented at the conference “Energy from Agriculture: New Technologies, Innovative Programs, and Success Stories,” St. Louis, MO (December).Google Scholar
Stallings, C.C. 2007. “Distiller's Grains for Dairy Cattle and Potential Environmental Impact.” Virginia Cooperative Extension, Publication No. 404-135.Google Scholar
Swenson, D., and Eathington, L. 2006. “Determining the Regional Economic Value of Ethanol Production in Iowa Considering Different Levels of Local Investment.” Working paper, Department of Economics, Iowa State University, Ames, IA.Google Scholar
Teague, M.L., Bernardo, D., and Mapp, H. 1995. “Farm Level Economic Analysis Incorporating Stochastic Environmental Risk Assessment.” American Journal of Agricultural Economics 77(1): 8–19.Google Scholar
U.S. Department of Agriculture. 1986-2008. Agricultural Prices. National Agricultural Statistics Service, U.S. Department of Agriculture, Washington, D.C. various issues. Available online at usda.mannlib.cornell.edu/mannusda/.Google Scholar
Waugh, F. 1951. “The Minimum-Cost Dairy Feed.” Journal of Farm Economics 33(3): 299–310.Google Scholar
Westcott, P.C. 2007. Ethanol Expansion in the United States: How Will the Agricultural Sector Adjust? Economic Research Service (ERS) Report No. FDS-07D-01, ERS, U.S. Department of Agriculture, Washington, D.C.Google Scholar
Whitney, M.H., Shurson, G.C., Johnston, L.J., Wulf, D.M., and Shanks, B.C. 2006. “Growth Performance and Carcass Characteristics of Grower-Finisher Pig Fed High-Quality Corn Distillers Dried Grain with Solubles Originating from a Modern Midwestern Ethanol Plant.” Journal of Animal Science 84(12): 3356–3363.Google Scholar