Distillers grains and the livestock industry in western Canada

The ethanol industry in Western Canada has seen significant growth in recent times spurred on mainly be environmental considerations. For a region with substantial grain production, increased prices from additional demand by the biofuel industry may inure to the benefit of grain farmers and land owners in the long term. The livestock industry however remains in a complex position facing the possibility of higher feed costs on the one hand and potential savings in feed cost on the other, with the availability of distillers grains- a by-product from ethanol production. The sectorial implications for the livestock sector could also be diverse and dependent upon the capacity to incorporate the distillers grains into the different feed rations. There is also the possibility of a spill-over effect from the US distillers grains market. This study therefore sought to complement current nutritional research by providing an economic perspective of the impact of distillers grains on the livestock industry in Western Canada. Focussing primarily on the beef cattle and hog industries, the study applied both linear programming and time-series techniques to assess potential benefits and costs. Potential positive economic benefits were observed for the inclusion of wheat and corn distillers grains with the former having a higher economic value in the high-protein feed segments. Dependent on market factors such as the price of substitute feeds, exchange rates and transportation considerations, the magnitude of these savings could range between $7.29 and $0.34/tonne. The study recommends an understanding of these dynamics in order for livestock and ethanol producers to derive mutual benefits from the fledging biofuel industry in the Western plains