Strong livestock sector compounds the value of ethanol
By Todd Sneller | 12/10/2007

We are all familiar with compounding interest, whether it’s in a savings or retirement account. Interest earned upon interest – it helps the initial investment grow.

In Nebraska, ethanol and livestock production compound the farmer’s investment in corn. The result compounds the benefits to the state as a whole, including investments in rural communities, new jobs and increased tax revenues. It is a tremendously beneficial cycle that is repeated each time an ethanol plant begins production in the state.

Basically, an ethanol plant adds value to that initial investment in corn by creating new, value-added products. One product, ethanol, is a renewable, clean burning fuel used to power our vehicles – a premium fuel that saves us all money at the pump.

Another is distillers grains, a high-quality feed ingredient that can help lower the cost of feed for all livestock producers, but especially cattle producers since cattle can consume distillers grains efficiently in larger quantities. Distillers grains is an economic feed product for Nebraska cattle producers and the local demand for distillers grains increases the value of this commodity. This synergy helps the Nebraska cattle industry produce some of the best beef in the world while adding value to corn processed in ethanol plants across the state.

Distillers grains is an important product for ethanol plants. This high value feed product adds to the plant’s bottom line, which is why ethanol producers pay close attention to the quality of their distillers grains. A product with consistent quality is of greater value to livestock producers.

In the past year, Nebraska’s ethanol plants produced more than 2 million tons of distillers grains. That’s a lot of feed; or, more precisely, that’s a lot of opportunity to add value. Fortunately, Nebraska’s livestock industry is there to consume an increasing volume of the high protein co-product from ethanol plants.

As the ethanol industry continues to grow, distillers grains production will increase. By some estimates, production will reach 10 million tons by 2010. That’s a lot of opportunity!

To take full advantage of that opportunity we need a strong, healthy and growing livestock industry. That’s what excites me about efforts to expand Nebraska’s livestock industry by organizations such as the Alliance for the Future of Agriculture in Nebraska (A-FAN). The more we compound the value of our agricultural products in the state, the more everyone benefits. A-FAN helps farmers do just that by assisting them when they want to add a livestock component to their operation or expand an existing operation.

A strong local livestock sector reduces the need to dry distillers grains and ship them via truck or rail to other parts of the country. Instead, ethanol plants can supply them to the livestock producer just down the road, creating efficiencies for both the plant and producer. Growing the livestock sector along with the ethanol industry makes sense in order to take advantage of those efficiencies.

As a bonus, we’ll see important benefits along the way: More jobs, a larger tax base and new investments in rural communities. There’s no better way to compound the value of agriculture in Nebraska than supporting the animal agriculture industry. It’s an investment that makes sense.

Todd Sneller is administrator of the Nebraska Ethanol Board, which is based in Lincoln, Neb.