Speaking to a crowd of more than 500 feed producers, marketers and buyers from around the world at the Export Exchange in Minneapolis, Renewable Fuels Association(RFA) Vice President Geoff Cooper explained that distillers grains and other ethanol co-products have become a tremendously important component of the global animal feed market. The Export Exchange, which is a joint conference between the RFA and the U.S. Grains Council, began Monday and ended Wednesday.
“The American ethanol industry produced nearly 39 million tons of nutrient-dense animal feed in the 2011/12 marketing year, meaning the ethanol industry has surpassed the U.S. soybean crushing industry in terms of feed production,” Cooper said. “The feed produced by the ethanol industry is nourishing beef, dairy, swine, poultry, and fish around the world. About one-quarter of the feed co-products generated last year were exported to more than 50 countries.”
Cooper also explained that the U.S. ethanol industry has responded to the historic drought of 2012 by curtailing its consumption of corn. “There is a false notion out there that the ethanol industry is somehow insulated from the effects of the drought and high corn prices because of the Renewable Fuel Standard (RFS),” Cooper said. “That simply isn’t true. As crop conditions deteriorated in July and August and corn prices increased, corn use for ethanol dropped by almost 15 percent. That means the ethanol industry reduced its corn consumption by about 600-700 million bushels on an annualized basis in less than two months’ time. Without a doubt, the ethanol industry has not been spared from the effects of the drought.”
A waiver of the RFS, as requested by some governors, wouldn’t have any meaningful impact on corn prices or availability, Cooper said. Further, he pointed out that if an RFS waiver did reduce ethanol and biodiesel production, prices of distillers grains and soybean meal would increase and net feed costs might actually increase for some livestock and poultry feeders.
Despite the effect of the drought on U.S. crops, Cooper remarked that grain and feed markets are global in a nature and underscored that the world grain crop is projected to be the second-largest in history by the U.N. Food and Agriculture Organization. While grain production is projected down in North America and Europe, output is projected higher in Asia, Africa, Central America, and South America.