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Implications of Growing Biofuel Demands on Northeast Livestock Feed Costs

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

Abstract

The relationship between complete-feed prices and ingredient prices is estimated in order to analyze the effect of higher commodity prices on feed costs, with particular attention paid to the substitutability of corn distillers dried grains with solubles (DDGS). Using the historical price correlation between corn and DDGS, each $1 per ton increase in the price of corn increases feed costs between $0.45 and $0.59 per ton across livestock sectors. Marginal feed costs based on lower forecasted price correlations are reduced between $0.05 to $0.12 per ton across livestock sectors, but only for the dairy ration is the reduction statistically significant. Overall, DDGS cost savings are relatively limited and insufficient to offset the impact of other higher-priced feedstocks.

Suggested Citation

  • Schmit, Todd M. & Verteramo, Leslie J. & Tomek, William G., 2009. "Implications of Growing Biofuel Demands on Northeast Livestock Feed Costs," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(2), October.
  • Handle: RePEc:ags:arerjl:55540
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    References listed on IDEAS

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    1. 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," Center for Agricultural and Rural Development (CARD) Publications 06-bp49, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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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 (IFAMA), vol. 17(1).
    2. Johnson, Matthew & Yu, T. Edward & Griffith, Andrew P. & Jensen, Kimberly L. & Cho, Seong-Hoon, 2015. "Regional Dynamic Price Relationships between Distillers Dried Grains and Feed Grains," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196900, Southern Agricultural Economics Association.

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