Feed Lot Magazine Online, Wet Byproduct Feeds Research Paying Off Economically

Wet byproducts from Nebraska's growing ethanol and grain processing industry have become major cattle feed sources that provide significant economic payoffs, a University of Nebraska economic analysis found.

Research by University of Nebraska (NU) Institute of Agriculture and Natural Resources animal scientists in the late 1980s and early 1990s proved the feasibility and benefits of feeding ethanol processing byproducts directly to feeder cattle in wet form instead of drying and selling them as dry feed. These studies demonstrated the performance of wet gluten feed, wet distillers grains and steep liquor and showed how best to feed them.

Researchers worked closely with the expanding ethanol and grain processing industry as well as cattle feeders to share their findings. In less than a decade, wet byproducts evolved from unfamiliar material to a major feed, thanks partly to this research.

This innovation has a significant economic impact on Nebraska, said Dick Perrin, the NU agricultural economist who recently analyzed the direct economic benefit of feeding byproducts wet instead of dry.

From 1992 through 1999, feeding byproducts wet yielded cumulative net economic benefits of $212 million in Nebraska, he found. Annual net economic benefits of feeding wet byproducts grew from about $1 million in 1992 to an annual average of $42 million for 1997 through 1999 as new processing plants opened and more Nebraska feedlots fed wet byproducts.

Perrin determined the average value of all types of wet byproduct feeds was $130 per ton of dry matter from 1992-99 based on the value of feeds for which they substitute. Wet byproduct feed values vary depending on prices of ingredients for which they substitute. Values peaked in 1996 along with corn prices, averaging $160 per ton of dry matter, about 50 percent higher than their 1999 low.

Wet byproducts' feed values averaged $130 per ton, while their dried feed value, adjusted for drying costs, averaged $93 per ton. That's an average added value of $37 per ton of dry matter for wet feeds.

Nebraska feedlots fed nearly 6 million tons of wet byproducts since 1992 at $37 per ton of added value for a cumulative $212 million benefit, Perrin said.

University of Nebraska's Institute for Agriculture and Natural Resources (IANR) Animal Scientist Terry Klopfenstein and colleagues began exploring the potential for feeding byproducts wet in the 1970s. Studies expanded as interest in byproducts grew along with the state's ethanol industry.

Their research showed wet byproducts were economical and performed as well as or better than corn in rations. While byproducts traditionally were dried, IANR scientists found drying reduced their nutritional value. Feeding byproducts wet saved drying costs for processors and was economical for feeders.

"There's an economic advantage to feeding this material wet," Klopfenstein said. "Feeders and producing companies share that advantage. Our goal is to help them both." Profitable processors provide a clean industry for communities and markets for grain.

While this innovation can't be attributed solely to one institution, Perrin said, NU animal scientists pioneered research on feeding wet byproducts and have studied this topic more extensively than scientists elsewhere.

"These research findings without a doubt affected decisions to build new ethanol plants in Nebraska designed to market wet byproducts," he added. Nebraska's ethanol capacity grew more than any other state's in the 1990s. Six of Nebraska's seven wet and dry milling plants were designed to market byproducts wet.

The $42 million annual net economic benefit from feeding byproducts wet in Nebraska represents a handsome return on public investment in agricultural research, Perrin said. For comparison, the annual average economic benefit of this one innovation represents more than 75 percent of the entire IANR Agricultural Research Division's total annual expenditures, which averaged about $54 million annually the past three fiscal years, he said.

"We see this as a win, win, situation," said Klopfenstein, who continues studying how best to use wet byproducts. "That's what's been so rewarding about this. We've been able to help all sides."