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USGC says DDGS sales boost U.S. farm income

By ANN HINCH
Assistant Editor

DALLAS, Texas — The U.S. Grains Council (USGC) is working to beat February’s news that its activities meant an additional $659 million in income for American farmers last year.

Early last month, the USGC announced it had contracted with Informa Economics of Memphis, Tenn., to perform an independent review of the council’s impact on U.S. agriculture, a review the USGC stated was validated by the USDA.

According to the USGC, this is a return of $37 for every $1 farmers invested in the council through checkoff money in 2008. It was spreading the word through its booth at the Commodity Classic trade show in Dallas in late February.

Vice Chair Rick Fruth of Ohio said this success is the result of the USGC cultivating lasting international markets for farm products. “You tend not to get distracted by the ‘fad of the moment,’” he said – instead, focusing on the long term.

The success story now is in finding markets to sell distillers dried grains with solubles (DDGS), which is a co-product of ethanol, as livestock feed. Mike Deering, director of communications, said even as ethanol profits erode, “DDGS is still profitable at home and overseas.”

Its value has increased each year, he said, and it’s selling for about 92 percent of the price of corn. “I think it’s kind of found its home, so to speak,” around that 92 percent mark, he explained.
But just because the USGC is finding ready markets to sell DDGS in places like Egypt and Morocco does not mean the door is open wide in every country. Skepticism lingers about the safety of DDGS, with respect to possible disease and effects of genetic modification (GMO) on the grain seed – and by extension, livestock ingesting it. The USGC sends researchers overseas to explain the benefits of DDGS and other grains and to debunk fears.

“Education, that’s our silver platter,” Deering said. “That’s what we do.”

Last year, the Australian government agreed to a DDGS feeding trial through one of its businesses, CopRice, which manufactures feed for horses, dairies, poultry, rabbits and pets – the American DDGS was made into pellets for cows, to boost milk volume, fat and protein content, as well as for horses. The DDGS was donated by USGC member Hawkeye Gold of Iowa.

What’s significant is that Australia is particularly sensitive to accepting GMO products, explained Dale Artho of Texas, USGC past chair.

The USGC had to go through an arduous registration and licensing process just for the trial.

“They call the whole process their quarantine,” Fruth added. “It’s kind of like ‘guilty until proven innocent.’”

Artho said this isn’t limited to DDGS. “It’s not just (making) sales” to other countries, he said. “It takes a while to get those markets.”
Deering said another potential DDGS market is aquaculture, especially in southeastern Asia.

The USGC recently received results from feeding a 15 percent DDGS inclusion to fish in Vietnam, which showed improved growth rate and reduced mortality. He explained one concern was how the DDGS might affect meat quality and color – whether it would leave a yellow tinge – but these worries turned out to be unfounded.

The United States’ biggest single DDGS customer is Mexico, which imported 1.2 million metric tons last year, according to Deering. Canada is second, with 771,000 metric tons, despite having its own ethanol industry. Fruth said the Mexican market is still growing, as is the northern African market.

While there’s no DDGS sales progress in European Union (EU) nations because of the GMO issue, USGC President and CEO Ken Hobbie said 2008 was a good year to sell sorghum as livestock feed in the EU.

As for DDGS competition, he said there is none from the EU because those countries focus more on producing biodiesel – which uses soybeans, not corn – than ethanol.

Hobbie added the USGC also continues to work with China to develop its livestock industry – particularly swine and dairy – since that country tends to come to the U.S. for feed grains. Higher protein feed could cut down the need for adding melamine, the substance which has been so controversial in contaminated Chinese food and feed during the past few years.

3/11/2009