Tuesday, June 17, 2008

Centralization of Cattle Finishing

Of course "The Stockman Grassfarmer" is a little biased when it comes beef finishing and The Food Institute for Food and Development Policy of Oakland, California may have an agenda (don't we all), but the article from them in the June issue of "The Stockman Grassfarmer" does cause me to wonder. It makes me wonder if the small feedlots (which aren't very small) can survive, it even makes me wonder if the big ones can survive, it makes me wonder if feeding the ethanol byproducts is a good idea, and it makes me wonder what will happen to our food system in the future if we continue down the path of industrialization and centralization.

According to the article there are seven pounds of waste byproduct from each gallon of ethanol made, also 46% of the byproduct (they call it waste in the article) goes to dairy cattle and 42% goes to beef cattle. This is just anecdotal, but my uncle told me of his neighbor who only feeds eight bushels of corn in finishing with the rest be dried distillers grain (the byproduct/waste). The article reports that by the end of this year the ethanol byproducts will replace one billion bushels of corn in the livestock industry (they make sure to mention that they are tax-subsidized byproducts).

I guess the ethanol plants are feeling the pinch of high grain prices just like everyone else (even with their subsidies) and so are looking for more ways to make money. The newest thing is to combine feedlots with ethanol plants. A new plant in Nebraska has done just that by adding a 28,000 head feedlot and other new plants are planning on adding even larger feedlots.

If this trend continues the ethanol plants will not only be subsidized to produce gas, but also to finish cattle. This would be a major step in the continued centralization of the agricultural world and could effect generations of farmers to come. On the other hand it just may open up more opportunities for locally finished grass-fed beef...


Rich said...

Combining feedlots with ethanol plants to offset the losses associated with the rising price of corn seems awful similar to the way confinement pork facilities were being built by corn growers to offset the high prices of fertilizer.

Even if they produced pork at a loss, the liquid fertilizer from the confinement facility was supposed to offset the losses by allowing them to grow more corn at a cheaper input cost (due to the "free" fertilizer), which they could then feed to the hogs, which would make more liquid fertilizer. All it produces is a vicious circle of cheaper and cheaper pork, mounting debt, and lower profits.

Building feedlots to offset the losses from producing ethanol will probably only result in beef being sold at an even bigger loss, since they are simply being used to "prop up" unprofitable ethanol plants.

Of course, these types of feedlots will also almost guarantee a continuation or expansion of ethanol related subsidies. If 5%, 10%, or 20% of our beef is eventually fed in these type of ethanol byproduct feedlots, do you think the subsidies will ever end for ethanol? If the ethanol plants shut down, the feedlots will also shut down, and politicians seeking votes won't be likely to allow that to happen regardless of the cost to the taxpayer.


I believe a larger question the ethanol industry is faced with now is where it is going to get the ingredients needed to produce its fuel. It's forcasted that 2008 ethanol production will eat up 5.5 billion bu of corn. The first USDA corn forecast was only 11 billion bu. for 2008.

In our area we are seeing a drastic slowdown in ethanol production and the building of new ethanol refineries. ICM (an ethanol plant builder based near my home) has recently laid off 50% of their workforce.

With the new farm bill that recently passed we are going to see a lot of money earmarked for new energy research as well as the subsidies you mentioned. As soon as somebody finds a way to make cellulosic ethanol economically viable, we could see a major switch in the grain markets. Corn will not maintain the demand it has now, but may have to compete for acres against switchgrass and other producers of cellulosic ethanol.

When this does happen, it is hard to say what will happen to the "hybrid" ethanol producers feeding DDG's in onsite feedlots. Many of the existing ethanol plants would likely be switched over to produce the cellulosic ethanol, so what will happen to the cattle when there are no cheap byproducts to feed.

I definitely do not know, but it will be interesting to watch. I too am a new farmer who quit my 9-5 job to get back to my roots. I think now as technology is drasticaly changing the face and pace of farming, we may see more change than our grandfathers did.

Andrew said...

I'm with you Ethan "...it just may open up more opportunities for locally finished grass-fed beef..."

I may be too close to this, but my reading of the overall tone is that more and more people are pulling away from mass production, with the reported backlash to GM technology on the rise and the like.

The rise in Farmers Markets and box systems in their various forms also support this.

While I agree with the comment above "technology is drastically changing the face and pace of farming, we may see more change than our grandfathers did" alot of the 'change' may be back to what our grandparents did.

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