Distillers Dried Grain Product Innovation and Its Impact on Adoption, Inclusion, Substitution, and Displacement Rates in a Finishing Hog Ration
Jacinto F. Fabiosa
September 2008 [08-WP 478]
Fabiosa, J.F. 2008. "Distillers Dried Grain Product Innovation and Its Impact on Adoption, Inclusion, Substitution, and Displacement Rates in a Finishing Hog Ration." Working paper 08-WP 478. Center for Agricultural and Rural Development, Iowa State University.
This study finds that the use of distillers dried grain with solubles (DDGS) as feed is greatly influenced by the development of DDGS products that are available in the market. We find that newer-generation DDGS products have a higher optimal inclusion rate, reaching the maximum allowable rate of 20% for swine, and they have a higher displacement rate of 0.23 for soymeal and 0.93 for corn. Although both traditional and newer-generation DDGS products are primarily used as a corn substitute for energy, it will take only a relatively small change in the price or matrix A (or both) for the newer-generation DDGS to primarily substitute for soymeal for the limiting amino acid, lysine. In contrast, traditional DDGS products have a lower optimal inclusion rate of 7%, and they have a lower displacement rate of 0.75 for corn and 0.08 for soy meal. This product is primarily used as a corn substitute for energy.
When traditional DDGS is introduced in a feed ration, total feed cost declines by 2.64%, or a reduction of $0.29 per cwt of feed. This translates into a $2.17 per head savings in feed cost in a feeder-to-finish operation. Using newer-generation DDGS reduces feed cost by 9.88%, or a reduction of $1.08 per cwt of feed, saving feeder-finisher operations $8.06 per head.
This study suggests that as a substitute product, the price of DDGS will track the price of both corn and soymeal. It will be more of the former until new-generation DDGS can be used as a primary substitute for soymeal and take a dominant share of the market.
Finally, this study clearly points to the critical importance of DDG product innovation to promote widespread and optimal use of DDGS as a feed ingredient, thereby alleviating the food-feed-fuel trade-off.
Keywords: biofuel, DDGS, DG, distillers dried grain with solubles, distillers grain, feeder-finisher, optimal feed ration.