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Implications of Growing Biofuels Demands on Northeast Livestock Feed Costs

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Author Info

  • Schmit, Todd M.
  • Verteramo, Leslie J.
  • Tomek, William G.

Abstract

The relationship between complete-feed prices and ingredient prices are estimated to analyze the effect of higher commodity prices on feed costs, with particular attention to the substitutability of corn distillers dried grains with solubles (DDGS). Using an historical positive price correlation between corn and DDGS, each $1/ton increase in the price of corn increases feed costs between $0.45 and $0.59 per ton across livestock sectors. Assuming a negative long-run price correlation reduces these marginal feed costs to between $0.11 and $0.36. Overall, DDGS cost savings are relatively limited and insufficient to offset the impact of other higher-priced feedstocks.

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Bibliographic Info

Paper provided by Cornell University, Department of Applied Economics and Management in its series Working Papers with number 127011.

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Date of creation: 2007
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Handle: RePEc:ags:cudawp:127011

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Keywords: biofuels; commodity prices; distillers dried grains with solubles; livestock feed costs; Livestock Production/Industries; Resource /Energy Economics and Policy;

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References

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  1. Coffey, Brian K., 2001. "An Analysis Of The Effects Of Feed Ingredient Price Risk On The Selection Of Minimum Cost Backgrounding Feed Rations," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 33(02), August.
  2. Ferris, John N., 2006. "Modeling the U.S. Domestic Livestock Feed Sector in a Period of Rapidly Expanding By-Product Feed Supplies from Ethanol Production," Staff Papers 11628, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  3. Amani Elobeid & Simla Tokgoz & Dermot J. Hayes & Bruce A. Babcock & Chad E. Hart, 2006. "Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors: A Preliminary Assessment, The," Food and Agricultural Policy Research Institute (FAPRI) Publications 06-bp49, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  4. Anderson, John D. & Trapp, James N., 2000. "The Dynamics Of Feeder Cattle Market Responses To Corn Price Change," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(03), December.
  5. Beghin, John C. & Dong, Fengxia & Elobeid, Amani E. & Fabiosa, Jacinto F. & Fuller, Frank H. & Hart, Chad E. & Kovarik, Karen & Tokgoz, Simla & Yu, Tun-Hsiang (Edward) & Wailes, Eric J. & Chavez, Eddi, 2007. "FAPRI 2007 U.S. and World Agricultural Outlook," Staff Reports 7296, Food and Agricultural Policy Research Institute (FAPRI).
  6. Hadrich, Joleen C. & Wolf, Christopher A. & Black, J. Roy & Harsh, Stephen B., 2008. "Incorporating Environmentally Compliant Manure Nutrient Disposal Costs into Least-Cost Livestock Ration Formulation," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(01), April.
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Cited by:
  1. Cai, Xiaowei & Stiegert, Kyle W., 2014. "Market Analysis of Ethanol Capacity," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 17(1).

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