Dried Distillers Grain for Animal Feeds

Ayhan Kındap General Manager A.K. Global Trade and Consultancy

DDGS is an attractive replacement for traditional corn, soybean meal, sunflower meal and phosphorous ingredients used in animal feeds with its high energy, protein and phosphorous content.

The purpose of this write-up is to provide the readers of Feed Planet Magazine with the insight into the general information about DDGS related with its production process, its varieties, handling and storage issues, quality factors, pricing and transportation and also United States' share in the world trade and Turkey's DDGS imports.

One of the greatest challenges in the world is to provide a growing global population of people with enough food. The global demand for food is forecasted to increase by 60% by 2050, which will increase demand for meat, milk and egg.

To meet this demand, everyone involved in food production must develop and find new technologies to increase the amount and efficiency of food production.

In order to increase efficiency, the existing nutrition system should be improved to convert energy and nutrients in the feed ingredients more efficiently into animal product.

The global feed industry over 1 billion mts of annual feed production plays an important role in feeding the world.

While many feed grains such as corn, wheat, barley represent major ingredients used in animal feeds, the majority of other feed ingredients used by the feed industry are by-products derived from various agricultural and food industries that are not suitable for human consumption but provide valuable energy and essential nutrients in animal feed.

Dried distillers grain with solubles (DDGS) is also an industrial feed ingredient and co-produced during the ethanol production.

Ethanol can be produced from all the grains as well as sugarcane like in Brazil, tapioca and sugar beet as well. DDGS is named according to the grain utilized in the process such corn DDGS, wheat DDGS, barley DDGS, rice DDGS and so on.

But the most popular one is corn DDGS which is produced from corn and the majority of worldwide DDGS production is produced in United States.

Researches are continuing about the ethanol industry co-products and mainly on DDGS for improving nutritional values and also on the limitations for optimal DDGS use in animal feeds.

High energy, protein and phosphorous content of DDGS are an attractive replacement for traditional corn, soybean meal, sunflower meal and phosphorous ingredients used in animal feeds.

Graph-1 shows global ethanol production by country from 2007 to 2019. Global production continues to increase. The United States is the world's largest producer of ethanol, having produced over 15.7 billion gallons in 2019.

Together, the United States and Brazil produce 84% of the world's ethanol. The vast majority of U.S. ethanol is produced from corn, while Brazil primarily uses sugarcane. But the co-product is not DDGS.

Graph-1

ETHANOL AND DDGS PRODUCTION PROCESS Majority of ethanol is produced by dry-grind method. Dry-grind ethanol production process is shown in the below Figure-1.

Figure-1

The first step in ethanol production using dry-grind technology is to reduce the particle size of corn by grinding it with a hammermill. Particle size of the grain can affect ethanol yield and therefore ethanol producers try to use finely ground corn to maximize ethanol yield.

Water is added to the ground corn. Cooking is then used to hydrolyze starch into glucose with the addition of enzymes for yeast to convert glucose to ethanol by fermentation. Fermentation is the process where yeast convert sugars to alcohol. During the process carbon dioxide comes out and collected in tanks.

After fermentation, ethanol collected from fermenters is contaminated with water. By distillation, water is removed and pure ethanol is produced.

The water and solids remaining after distillation of ethanol are called whole stillage. Whole stillage is comprised primarily of water, fiber, protein and oil.

The mixture is centrifuged to separate coarse solids from liquid. The liquid, called thin stillage, is subjected to an additional centrifugation step to extract oil before going through an evaporator to remove additional moisture to produce condensed distiller's solubles (syrup) which contains about 30 % dry matter.

Condensed distillers solubles can be sold locally to cattle feeders or combined with the coarse solids fraction and dried to produce dried distiller's grains with solubles (DDGS).

The coarse solids contain about 35 percent dry matter and can be sold to nearby cattle feeders without drying. After dryer, DDGS has around 88 percent dry matter.

Almost one third of the corn used to produce ethanol is recovered as co-products for use in animal feeds. All of the non-starch components in corn are recovered and concentrated in the co-products which contain almost three fold of the nutrients in corn grain.

It is better to know the input and output quantities in ethanol production. Figure-2 shows the relative production quantities for each 100 kg of corn utilized in ethanol production.

Figure-2

EMERGING TECHNOLOGIES IN ETHANOL PRODUCTION

The ethanol industry is continuing to evolve where dry-grind ethanol plants are becoming bio refineries to not only improve ethanol yield, but also create a more diversified portfolio of corn co-products.

Today, much of the focus of new engineering technologies being implemented in some dry-grind ethanol plants involve;

1) Corn fiber separation 2) Enhanced corn oil extraction 3) Production of high protein (greater than 40%) corn co-products.

So we can talk about 4 types of DDGS currently as follows; • Conventional DDGS Oil>9 % • Low-oil DDGS 5%<Oil<9% • De-oiled DDGS Oil<5% • High protein DDGS Protein >40%

The most important point to remember when considering purchasing and using any of the new high protein corn co-products is the nutritional composition and energy values which are unique and vary among these co-products. Furthermore, these new products are being branded with unique names to distinguish each one from the others.

Several new high protein co-products are becoming available for US market and also export markets. Although the protein and amino acid content is substantially greater in these co-products compared with conventional DDGS, the amino acid digestibility and metabolizable energy content varies among co-products.

HANDLING AND STORAGE OF DDGS

Special care should be paid for DDGS storage and in several stages of handling, transport, and bulk vessels and containers shipments.

Proper feed ingredient storage is essential for preserving nutritional value and preventing spoilage.

One of the greatest challenges for handling DDGS is its propensity for bridging, caking and poor flowability.

DDGS color is not a reliable indicator of DDGS quality and nutritional value Normally contract standards show only maximum moisture, max fiber and minimum protein and fat values.

Color of DDGS has become a quality factor of great importance for the export markets.

A color measurement system is developed and is called Hunter L number. DDGS with number greater than 50 is considered to be a better DDGS.

In reality, DDGS quality means the absence of mycotoxins and undesirable anti-nutritional factors and also nutrient content and digestibility.

But purchasers generally use color as a general indicator for differentiating quality and digestibility among other things.

ECONOMIC VALUE AND QUALITY OF DDGS

Normally the purchase price of an ingredient is based on minimum guarantees for crude protein and crude fa. For DDGS, the purchase price is based on the combination of protein and crude fat content of DDGS, often referred as the profat content.

Additionally crude fiber, moisture and ash are all specifications of a purchase contract.

But this specification does not provide accurate information on the energy level, nor does it account for the amount and digestibility of specific nutrients such as amino acids, phosphorous and other essential nutrients required by animals.

Thanks to major improvements in nutritional measurements, animal feeds are formulated on a metabolizable energy (ME) or net energy (NE) basis and a digestible protein or amino acid basis.

Formulation of least-cost animal diets is done by using accurate ME or NE, digestible amino acids and digestible phosphorous values and placing constraints in minimum or maximum dietary concentrations.

Use of common method of ''profat'' content to assessing nutritional and economic value of DDGS sources would cause most DDGS purchasers to choose high profat DDGS. But economic value or shadow price of DDGS could be different than what the purchasers think.

Profat specifications should not be used when making pricing decisions for purchasing DDGS since accurate ME and SID amino acid prediction equations have been developed for the diets.

Purchasers should use the economic value (shadow price) and compare it with the market price before making any purchasing decisions.

FACTORS THAT AFFECT DDGS PRICING AND TRANSPORTATION

Price at the origin country and transportation logistics to importing country is the main cost components. Main competing ingredients are corn and soybean meal and phosphorous supplements. DDGS price is affected by several factors such as the followings

• Market price of corn and soybean meal • Availability of supply for export • Seasonality of domestic consumption of the origin country • Fluctuating transportation costs • Import tariffs of the importing country

DDGS prices have followed the corn market more closely than the soybean meal market. Graph-2 shows historical corn and DDGS FOB prices at the gulf of Mexico to see how they move together.

Graph-2

Graph-3 shows historical soybean meal and DDGS FOB prices at the gulf of Mexico to see how they move together.

Graph-3

As one could see, the price correlation of DDGS with corn is more than soybean meal.

If corn and soybean meal prices are generally high relative to DDGS price, DDGS will often replace a larger proportion of corn and soybean meal in animal feeds.

The price of DDGS is also influenced by season of the year. Most of the US domestic DDGS use is in cattle feed. When cattle is moved to pastures for grazing during the summer months (May through October).

This results in an increased supply available for the export market of U.S. and usually results in lower DDGS prices compared to the other months.

Lower elevation costs coupled with traditionally lower barge freight during the summer months also adds to a more competitive DDGS value during this time period.

DDGS are transported by barges up to Ocean vessels. Barge freight and vessel freights are additional costs for the buyers. Transfer from barges to the vessel is usually done using mid-stream loaders.

The most common vessel sizes are handy size, handy max and panamax vessels. Sizes are 20-30,000, 35-49,000 and 50-75,000 mts respectively.

Container freight is not always suitable for the importer country. The importer country should be exporting some merchandise by containers to the origin country.

The United States is currently the world's largest container importer, which put it in a very unique situation.

Containers filled with electronics, textiles, auto parts, etc. arrive in the U.S. primarily from Asia and they need to be shipped back to that region in order to be re-loaded with the same types of goods.

As a general rule, use of bulk vessels is less expensive, more dependable and usually easier to control DDGS quality.

SUGGESTIONS FOR SUCCESS IN IMPORTING DDGS

Importers should understand the exporting company's production, logistical and transportation capabilities. Suppliers who market for specific ethanol plants have control over the origin of DDGS sources and can more easily control the quality of DDGS that is delivered.

Buyers who purchase through brokers or other suppliers that do not have direct marketing agreements with ethanol plants cannot easily control the quality of DDGS being delivered.

It is also possible for DDGS marketers that control the supply sources to send DDGS samples at the time of origination, to reputable commercial laboratories for testing and send results directly to the customer before a vessel or hold is loaded.

It is important to identify and agree on a reputable third party commercial laboratory for sample analysis to avoid potential problems upon arrival at the destination.

Mycotoxin testing can be conducted on samples obtained at origin, or the supplier can provide the procedures and limits for corn used at the ethanol plants where the DDGS was produced.

Color scores can also be determined for the DDGS customer using Hunter or Minolta color score measurements. Protein and fat guarantees should always be agreed upon before concluding a trade.

TURKEY'S DDGS IMPORTS

As shown in Graph-4, Turkey has been importing DDGS since 2005. While it had a trend of increasing every year, the trend was interrupted by the GMO law announcement in 2010.

Due to the concerns about the rejection of cargo, the import development has been slow. But the imports almost doubled in 2016 and Turkey had the record import of DDGS in 2017 with 1.8 mln mt when the DDGS prices were the most favorable because of the adverse effects of China tax barriers.

Then we had a decreasing trend each year after 2017. The import quantities realized as 1.2 mln mt and 830,000 mts in 2018 and 2019 respectively. This year in spite of the covid-19 problems, the expected DDGS import is expected to be around 1.1 mln mt.

The figures in Table-1 show the majority of DDGS is imported from United States with a 65 % share in 2019. Following U.S. figures, Russia, Bulgaria, Hungary and Holland are the first 5 origins. The following table shows all the origin countries of DDGS Turkey imported from in 2019.

Graph-4

The majority of DDGS is imported from United States with a 65 % share in 2019. Following U.S. figures, Russia, Bulgaria, Hungary and Holland are the first 5 origins. Table-1 shows all the origin countries of DDGS Turkey imported from in 2019.

DDGS are mainly utilized by Beef cattle and Dairy cattle in Turkey. Layer industry has also recently increased the inclusion rates. The inclusion rates in Broiler and Aqua is very low currently.

But there is big room in broiler sector if the poultry integrators' concerns are addressed properly by some technical knowledge supports. Aqua sector generally need higher protein products. New generation DDGS will be replacing the existing conventional feed ingredients in the coming years.

Graph-5

DDGS PRODUCTION AND EXPORTS IN UNITED STATES

Annually around 25-26 mln mt of DDGS is consumed within the U.S. market. The distribution of consumption is as in Graph-5; 44% is for Beef cattle, 30% for Dairy cattle, 15% for Swine, 9% for Poultry and 1% for others.

Graph-6

U.S. DDGS production and export become 36 mln and 11 mln mt respectively in 2019. Developments by years are shown in Graph-6 and Graph-7.

Graph-7

Table-2 shows the U.S. origin DDGS exports by countries. Although export percentages are changing every year, the leading importers are Mexico, South Korea, Vietnam, Thailand, Indonesia and Turkey respectively.

But Turkey once became the number 2 importer after Mexico in 2017. While Turkey's percentage reduced to 5.3 % in 2019, it looks this year it will go over 7% levels.

Following the United States and China conflict which changed the world trade structure and sourcing countries of the feed ingredients, the pandemic also had an additional impact on the government policies in favor of more self-sufficiency in feed ingredients and more food production.

The demand for more food caused the feed ingredient prices to go up after the pandemic. DDGS prices have also followed the price increases in soybean meal and corn and have increased around by 60-70 USD/mt in the last 5 months.

When all the ingredient prices go in the same direction, generally the relative prices keep almost the same. The more serious problem is that the food product prices can not follow the price increases in the feed ingredients because of the limited income of the majority of consumers, which puts the industrial companies in a difficult position.

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Source: https://feedplanetmagazine.com/blog/a-valuable-feed-ingredient-dried-distillers-grains-with-solubles-ddgs-1253

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