Posted on 04/05/2008 11:17:16 PM PDT by TigerLikesRooster
April 4, 2008, 11:08PM
Dueling demands for corn
Cattle feeders say the growing need for it in ethanol is driving up the price and threatening their livelihood
By BRETT CLANTON
Copyright 2008 Houston Chronicle
TULIA — Ask John Van Pelt his thoughts on ethanol, and he's likely to pull out his adding machine and let the numbers speak for themselves.
Van Pelt, the manager of a cattle feedlot in this town 50 miles south of Amarillo, is now paying $215 a ton for cattle feed — double what he spent just three years ago. With 20,000 cattle in his yard, that works out to about $25,000 per day, just in feed, and what could become several million dollars in added costs this year.
Van Pelt blames a surge in U.S. ethanol production for a near tripling in the price of corn, the main ingredient in cattle feed, and for cutting into profits across Texas' massive cattle feeding industry.
"If things stay this way, people are going to have to do things different," said Van Pelt, looking out from behind the wheel of his pickup on the sprawling sea of steel pens, cows and blue sky.
The issue of how to balance the needs of one of Texas' biggest and most well known industries with those of the rapidly growing biofuels business finds old and new Texas interests locking horns.
Cattle feeders won a victory last fall when the state Legislature killed a key incentive that had helped attract ethanol and biodiesel plants to Texas, a provision the feeders said gave preferential treatment to biofuels.
But U.S. ethanol production continues to rise amid growing demand for the fuel and as new plants come online, including several in Texas. The situation is likely to keep pressure on corn prices for both ethanol producers and cattle feeders.
Spurred by federal subsidies, U.S. ethanol production has more than tripled since 2000, hit 6.5 billion gallons last year and is on pace to surpass 9 billion gallons this year.
A sweeping new energy law, signed by President Bush in December, calls for an increase in U.S. ethanol output to 36 billion gallons by 2022.
Yet the measure shows a clear preference for moving away from corn ethanol; about 60 percent of the target is supposed to come from nonfood crops and agricultural waste, even though the technology is still under development.
"Corn ethanol holds a lot of promise, but there's a lot of challenges," Bush said last month at a conference in Washington, acknowledging he has heard complaints from livestock producers about the cost of feed.
The government has embraced ethanol as a way to help reduce America's dependence on oil. Today it is blended at low concentrations with more than half the nation's gasoline, helping to stretch the nation's fuel supplies and cut some harmful tailpipe emissions.
But there are growing concerns about the environmental effects and negative economic ripple effects of producing the fuel.
Higher corn prices have helped push up the price of everything from a gallon of milk to a bag of tortilla chips, and have persisted even after U.S. farmers produced a record 13.1 million bushels last year.
Ground beef, eggs up The price, for example, of ground beef has risen to $2.79 a pound, up 15 cents from a year ago, while eggs are up 42 cents in the past year to $2.17 a dozen, according to the Bureau of Labor Statistics.
Last week, fears that corn prices would keep rising were fed by a U.S. Agriculture Department report showing U.S. farmers will plant 8 percent fewer acres of corn in 2008 as more opt to grow soybeans and wheat. Corn prices surpassed $6 per bushel for the first time in response.
It all means that the biggest expense for Texas cattle feeders keeps getting bigger and is even threatening the livelihood of some established operators.
Scott Keeling, owner of Keeling Cattle Feeders in Hereford, said his yard, with 17,000 cattle on feed, has been operating at a loss amid the spike in feed costs. He knows others who have been forced to put feedlots up for sale.
"Right now," he said, "we're just in survival mode."
But the ethanol industry, which consumes about a quarter of the nation's corn crop, claims it is being unfairly singled out as the main cause of higher corn prices and grocery bills. Rising world demand for corn, inflation and higher energy costs also play a role, the industry contends.
"We account for a fair percentage of it, but it happens to be that we're kind of the poster child to blame," said Kevin Kuykendall, CEO of White Energy, a Dallas firm that opened the state's first large-scale ethanol plant in Hereford in January.
About 55 percent of corn produced in the U.S. is used as animal feed for livestock and poultry, according to the Agriculture Department, which estimates it takes about 7 pounds of corn to produce 1 pound of beef for retail sale.
Given the recent increase in corn prices — to an average $3.40 per bushel in 2007, up from an average $2.28 over the past 20 years — retail beef prices should have risen 14 cents per pound, the department calculates. But retail prices often vary widely.
Byproduct of ethanol White Energy, along with Panda Ethanol, another Dallas firm opening a plant in Hereford this year, have won over some cattle feeders in the Panhandle with a plan to sell a corn-based byproduct of ethanol at a discount to regular corn grain.
But other cattle feeders say the gelatinous residue, known as wet distiller's grain, is not a good substitute for corn in feed because it contains too much liquid, meaning animals have to eat more of it to add pounds and get ready for sale.
"It's kind of like if you drank four big glasses of water right before you went out and tried to eat a big meal," Van Pelt said.
Still, the two industries are likely to have to find ways to co-exist, since neither appears ready to fold up camp.
With 130 feed lots, Texas fattens up nearly 6 million cattle a year for sale, more than any other state. And while Texas has just one major ethanol plant today, at least three more are scheduled to open this year. Others are in the works.
Governor takes notice The matter has drawn attention from the top of state government.
"Finding that balance is what this is all about," Gov. Rick Perry said last summer in Houston. "We don't want to be put in the place of having to decide whether we are going to feed cattle or fuel vehicles."
Under a new bioenergy strategy, Perry has stressed the need for a broader palette of alternative sources to help Texas keep pace with its rising energy needs and maintain its place as a global energy hub.
To Van Pelt, it's just another sign of the growing recognition that ethanol alone isn't the answer to weaning America from its addiction to oil.
"Ethanol sounds good. It feels good. The government likes it," he said. "But it just doesn't work."
Ping!
so corn will cost as much as petrol?
Trash-based ethanol
Most of all of the experts say that corn is the worst choice for ethanol...that sugar beets are much better. But then you can only grow sugar beets in six or so states in the US.....with corn, you could have 40 states growing that. So thats how we got into this mess. The farmer doesn’t care....he just wants max profit. Currently...the price of corn is going out of sight...and alot of farmers are taking every acre of their property...even ten acres of lousy pasture land that they rarely ever used....to grow corn.
The by-product from ethanol production from corn and grains is - animal feed.
It takes nothing out of animal feed production. the protein in corn/grains is not used up in ethanol production. The mash is and always has been turned into animal feed.
If anything, the increased ethanol production is causing an increase in animal feed production from the increased mash output.
The REAL cause of corn, grain and oil seed crop price increases is the high costs of fuel, the higher cost of transportation, the doubling and tripling of fertilizer costs, (and severe shortage in many areas) and the doubling and tripling of herbicide and pesticide costs, much of the later 3 items are a result of pressures and protests from enviro-mental retards.
It's absurd that these input costs aren't even mentioned when it comes to the price of corn and grain stories.
Ethanol production isn’t making this mess. But cow hands like we see in this article can’t look at the big picture. I guess they expectr farmers to keep growing it for the same price even though their input costs have tripled in the last year.
why should the US subsidize
livestock operations in other countries
by exporting cut rate feed?
sorry third-worlders if you overpopulated
your country when oil was cheap
Does anyone know if the corn raised for ethanol and cattle feed is the same corn that people eat?
W could have killed this horrendous bill. Instead not only did he sign it, but has apparently gone over to the dark side regarding Glo-Bull warming.
Compassionate Conservative=RINO
Not to worry. The whores in Congress will pass legislation in a N.Y. minute to bail them out.
Its a no win situation for the average taxpayer.
That means cattle prices should fall and I might be able to get a few again to eat down my grass!
We have far more coal than corn, so lets just feed coal to cattle and save the corn for ethanol. Problem solved.
Food Grade corn is different than Feed Grain Corn, commonly known as #2 corn.
Corn used to feed animals and to fuel ethanol plants is different than what is used for human consumption. At issue is the fact that farmers who have grown corn for human consumption in the past, have switched their fields to grow #2 corn which is used for livestock feed and ethanol production because they can make more money doing so.
While the price of corn is causing a great deal of heartburn on farms and ranches feeding livestock, it's important to point out that it's just as troublesome to those who own/operate Ethanol plants. Most of the business models were based on $3/$4 corn. There is no profit being made by anybody, EXCEPT big oil who provides the fuel to grow, harvest, and transport the grain from the field to the Ethanol plants.
Better isn’t the same a cheaper. Corn is used because it is still the cheapest.
THE ECONOMIC FEASIBILITY OF ETHANOL PRODUCTION FROM SUGAR IN THE UNITED STATES
http://www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf
USDA July 2006, see page iv
U.S. Corn wet milling = 1.03
U.S. Corn dry milling = 1.05
U.S. Sugar cane = 2.40
U.S. Sugar beets = 2.35
U.S. Molasses = 1.27
U.S. Raw sugar = 3.48
U.S. Refined sugar = 3.97
Brazil Sugar Cane = 0.81
E.U. Sugar Beets = 2.89
All in dollars per gallon
“so corn will cost as much as petrol?”
How many ears of corn make in a gallon?
:)
If prices for our inputs remain constant through planting season it will cost 400-450 dollars an acre to plant corn.Folks around here are going to plant less corn this year.That is if it ever stops raining...
I’ve tried to explain all this here before,most people just ignore the facts and keep on shouting about how ethanol will destroy the world.
Why not just let most of the farmers go out of business if grain prices collapse?After all,your food comes out of a supermarket anyway....
If it bleeds, it leads....*sigh*
So the tables have turned. Corn farmers in years past had supplied corn to cattle feeders at below cost of production prices. As to the farm program. Be careful what you wish for. The old farm programs were why corn prices were cheap. Prices are finally readjusting. Cattle numbers will go down and prices will go up. Remember the law of supply and demand?
The field corn or “dent” corn you see growing is used both for cattle feed and human consumption. Your corn flakes and fritos are made from the same corn as cattle feed. Sweet corn is raised for canning and immediate consumption, it’s the corn in your garden.
Maise is just another name for corn. The term “corn” is used elsewhere as a description of any small grain.
Yes. Yes it does!!
I am growing weary of reading these headlines about the size of the corn crop being drasticly reduced. While you and I understand it's a factual statement, on the surface, what is never mentioned was how dramatically the corn crop acreage was increased last year. No one ever mentions how much corn after corn was planted last year. No one ever mentions the switch back to a corn/bean rotation is due to the prospect of $15 beans, nor do they acknowledge the vast difference in the cost of the inputs between corn and soybeans.
Eventho the input costs are lower for beans, my farmers (husband & 3 adult sons) think there is 'less hassle' growing corn.
forgot to add the /s after ‘Yes. Yes it does!’
“I hope that trash-based ethanol shows some potential.”
I knew there had to be a good use for democrats.
Thanks for the info. I’m curious, if ethanol does really catch on as a fuel, will the companies that produce it be known as Big Corn Oil?
Ethanol is distilled from starch/carbohydrates . Without it you're can eat all the protein you want , you're not going to get fat . Neither is a cattle beast.
Perhaps there is a difference depending on what part of the country you're talking about. Here in Iowa, corn chips are made from WHITE Corn. This is not the same corn fed to livestock. I've been feeding livestock for 40 years. I know what they eat.
Well perhaps I exagerated just a little. The advertising agencies who write the commercials for corn based products are making good money, as are the folks who create the eye catching packaging.
Ethanol plants are not making money. Livestock producers are going in the tank due to the high prices.
Corn Growers aren't making all that much money when you stop to consider the sky rocketing prices of Fertilizer, Seed, Chemicals, LAND (which recently soard into the $8000 per Acre where I live)and Labor
The point is, when you look at the bottom line on a balance sheet, there is not a lot of profit there, when everything is taken into consideration. And you must remember, NOT all farmers were lucky enough to sell their entire crop at the market high. Many that I know sell their crop in increments, so their profit is simply NOT what those on the outside consider it to be.
Government science projects, of which corn-based ethanol is but one, uniformly have results ranging from economically destructive to genocidal.
Where on that spectrum is US Government-backed ethanol production?
Let’s hope it’s merely economy-distorting and hurtful to little foreign people who don’t matter anyway.
>Does anyone know if the corn raised for ethanol and cattle feed is the same corn that people eat?<
No, they are different but the farmer will plant the one that brings the best return which currently is ‘cattle corn’.
Your right a lot farm neighbors sold early and only
the speculaors are making a bunch of dollars.
People in ag got the feedlot idea as a way to
specialize so that a big operator could fatten cattle
and smaller guys raise feed. Makes life simpler,
BUT th e big feeder is at mercie of market forces.
Whw 4 years ago feeder got his feed for 100 dollars a
ton farmers corn prices were less than cost of
growing and gov paid price supports to keep farms viable,
Now feeders, and a lot of them by the way are owned
or afilliated with the packers, paylittle over 200
dollars a to, and farmers get enogh for corn so no
price supports are paid, and everyone is having a hairy.
There is no shortage just speculators driving up the
prices based on rumors of shortages. Blaming ethanl.
At no time has the system ran out of blocks of corn
for speculators to buy and sell for a quick profit.
And that feeder gets about 450 lbs of meat for that 200
dollar ton of feed, plus other byproducts that
pay for part that feed cost. Figure it out, what 450 lbs
of meat will bring, plus the by-products.
There is no shortage just speculators, we are still exporting, while at the same time making 400,000
barrels of ethanol per day, while also making 100,000
tons of distillers grain for best cattle feed...Ed
LOL! That's rich. SHE is the one with the 40 years of hands on experience, YOU seem to be the one posting information from a book.
Care to share some of your credentials?
It is obvious that you are not in the agriculture business nor have you ever been selected to buy corn by the ton.
The main differences between the hundreds of varieties of corn grown for human and feed cattle consumption that a buyer would be aware of are primarily the starch content, the fiber digestibility and the protein values. Now the farmer has other items that they take note of - the agronomic characteristics -insect resistance, standability, stay green, drought stress tolerance, and disease resistance, these are of high concern to the grower.
Never in my years of being a beef cattle rancher have I heard anyone mention the color of the kernels, white vs yellow as being of high concern. There is sweet corn which is picked when it is between 2 and 3 months old for human consumption and there is cattle corn which is permitted to grow the full season. It is then chopped up for silage or cattle feed. All of it, the entire plant are fed to the cattle UNLIKE sweet corn which is eaten by humans.
I do suggest that you take an ag class at your community college on this subject so that you will have at least a little bit of an idea of what you are talking about.
Oh, by the way, Iowa Granny’s husband is a farmer. Yup, you guessed it, in Iowa. Can you guess what the the family grows? Yeah, corn is one of the crops. That’s right you were talking to a lady who knows more about corn than both of us and probably everyone who will see this post today. Would you like to know how to do a starch test to check for the rumen microbes, the available energy in a kernel of corn? You could ask Iowa Granny about that, she’ll know what you’re talking about and more than likely she could give you instructions.
So, in the future, be careful about trying to act as if you know it all on this forum.
You posted””reason the price of land went up is because someone thinks they can make more money from the land than what they paid “” unquote, well the corn speculators are doing same thing. And that huge land value increase
hurts farms as their property taxes sour, another
increasingexpense of raising corn.And speculators aren’t
doing farmers any favors on huge corn prices as it
brings about a backlash like yours. Farms make a few bucks
an acre at 4 dollar corn and no farm subsidies are
paid. No corn subsidy paid now.Before they got 2 bucks and it cost 50 cents more to raise, so we had price supports.
None are paid now. And only big oil gets a tax credit for blending ethanol, but even with that credit it is
50 cents cheaper than pump gas. Ethanol plants made money
at 2 dollar corn but most are farm co-op oriented,
so their reason for being is to make a market
for corn and add to the energy supply. Those operators
that got into it figuring gas would be 6 bucks now and
they’d get 5 for gal ethanol have scaled back.
Profit—We give 3 billion in tax credits to big oil.
But we also give big oil 30 times in other credits
built into tax code for oil exploration/developement.
But we don’t have to pay 6 billion in corn price
supports, at 50 cents a bushel like 4-5 years ago.
Now we have a farm bill that is mosly food stamps
and CRP paying not to farm 30 million acres...Ed
Cattle feeders aren’t necessarily losing money. I raise and feed polled herefords, but also raise my own corn. If someone feeds without hedging his projected feeding needs, he might be in a pickle, but that’s a risk inherent in any speculative position.
From the Canadian Food Inspection Agency website 24 Mar 2008:
The CFIA has conducted inspections in ethanol-producing plants to obtain an overview of the manufacturing process and the ingredients used. From these inspections, and communications with the industry, it has been determined that some of the ingredients used in the ethanol manufacturing process have not been assessed for safety and require approval. This has led to the determination that DG [distillers grains] produced by the ethanol industry differ from DG from distilleries producing alcohol for human consumption.As a result of this finding, the CFIA currently prohibits the feeding of ethanol-derived distillers grains to livestock (it allows those from liquor production). http://www.worldpoultry.net/news/id2205-40672/canada_new_feed_rules_for_biofuel_grains_proposed.html The CFIA Web site lays out startling info on the stuff that ends up in distillers grains. Reading through it, you remember what U.S. ethanol boosters want you to forget.
http://www.worldpoultry.net/news/id2205-40672/canada_new_feed_rules_for_biofuel_grains_proposed.html
Umm, you know that folks in the US have been feeding distillers grains for a couple of hundred years, don’t you?
AndCargill beef factory goes ka-boom http://gristmill.grist.org/story/2008/3/25/223211/808
Try reading the posts. Granny brought up the “white” corn comment and I pointed out that sweet corn is used for canning and in the home garden.
And to say that ‘no one’s making money except big oil’ is what kind of statement? Well thought out? The result of careful observation? What?
Yes the entire corn plant can be made into silage but often cobs and stalks are left in field and just the grain is taken and it the grain that we were talking about.
Sweet corn is not the corn used in baked goods, ready to eat cereals and such. What is called “dent” corn is. This is also the general kind used for animal feed. This was the gist of the discussion.
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