December 3, 2007


High feed prices help sell distillers grain in Canada


Rising feed costs are helping ethanol producers looking to sell distiller-dried grains these days, according to a Husky Energy representative.


"A lot of livestock users are looking for feed alternatives," the Husky Energy representative said. "They're looking to see if they can find a bit of a discount on some products and distillers grains are trading at a discount to say feed barley, feed corn and feed wheat. So distiller grains are definitely fitting into the market place."


Another Husky Energy representative, senior communications advisor Dennis Floate, said the market always existed for distiller grains. The change has been that more and more farmers are accepting them as an alternative feed source.


Floate said the majority of distillers grain produced by Husky Energy is sold to the cattle feedlot industry. Sales are also made to the dairy industry, but he said those have fallen off. The hog industry currently consumes a marginal amount of distillers grain but Floate added that growth is expected in that sector.


Distillers grains are a high-protein, non-animal-based livestock feed. When grain is fermented and distilled to produce either alcohol or ethanol, the heavy solids that remain are known as distillers grains. Distillers grains are available in a variety of forms, depending on whether they are sold wet (Distillers Wet Grains), dried (Distillers Dried Grains) or have solubles added (Distillers Dried Grains with Solubles).


Western Canada produces mainly wheat distiller grains while corn distiller grains are produced in eastern Canada and the US where ethanol is often corn-derived. Wheat distillers grains have a protein content of 36-37 percent and a fat content of 4-5 percent. Corn distillers grains have a 27 percent protein component and a fat component of 9-10 percent, according to the Husky representative.


Husky Energy is a major producer in Canada of distiller grains. Since 2006, Husky has operated a 130-million-liters-per-year wheat-based ethanol plant in Lloydminster, Saskatchewan. A second 130-million-liters-per-year wheat-based ethanol plant is set to begin operating in Minnedosa, Manitoba in the beginning of early December. According to the Husky representative, 130 million liters of ethanol will produce roughly 125,000  tonnes of distiller grains.


Floate said the Canadian Food Inspection Agency, or CFIA, will be holding a meeting in December to address concerns surrounding the use of distiller grains, including questions about regulations and safety issues. Input will be sought from producers, marketers and end-users.


A feedlot industry source said product consistency is a major concern for Canadian feedlots using distiller grains. He said many farmers prefer to use corn distillers grains imported from the US because they find there is not as much variation in the product from one batch to another. The higher fat content in corn distiller's grain is also an important selling feature, he added. Some US producers of corn distillers grain guarantee an 11 percent fat component.


The industry source said there are currently only a handful of distillers grain producers in Canada and he does not expect that number to rise significantly, despite all of the optimism surrounding the biofuels sector.


He admitted, however, that despite quality concerns, feedlots like distiller grains and noted that low costs are always a strong selling feature.


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