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DISTILLERS The Midwest Cattleman · April 23, 2020 · P25
continued from page 14 animal’s diet. “Once our cattle an entirely different ingredi- like for the industry.
of about 400 farmers/mem- are in the last leg of their diet, ent like soybean meal. If they “In the past, we’ve seen
ber owners, the dry mill plant they’re consuming so much have to switch, Schiefelbein similar episodes where the
began running in late Decem- feed that any little upset in estimates feed costs will rise market has recovered quick-
ber 2005. Today, it produces 65 the feedstuffs can cause an by roughly 20%. ly. Plants were able to rapidly
million gallons of ethanol per upset stomach, bloat, or diges- “There is no other inexpen- ramp up production, and get
year. tive problems,” he says. sive, or as abundant, source of back to normal,” he says. “But
As the fourth-largest eth- The fact that Schiefelbe- RUP than this wet by-prod- we also have seen episodes like
anol producer in the U.S., in Farms had a contract with uct,” Erickson says. “More pro- the Great Recession where it
Minnesota is home to 20 eth- Bushmills, and it had prepaid teins like soybean meal will be was a much longer, slower re-
anol plants that produce over for the product was also con- fed and certainly more urea in covery. I don’t think we know
1.4 billion gallons of ethanol cerning. “Fortunately, we were supplements, which is neces- yet which pattern we’re more
annually. Seven plants have able to convince them to hold sary. Because the type of pro- likely to see.”
idled operation and another off for a week, so we can stock- tein is different, it will impact The bottom line: In order for
six have slowed production pile as much supply as we younger, rapidly growing cat- the industry to recover from
since the beginning of March can,” Schiefelbein says. tle most. The increased corn this, Cooper says the economy
2020, according to RFA. Once the wet cakes are no in the diet also requires very has to reopen. “People have to
“When we’re feeding wet longer available, Bushmills is diligent management.” get back on the roads. People
cakes to the animals, espe- allowing them to switch over Why are plants shutting down? have to go back to their of-
cially ones that are ready to to dried distillers’ grains, so Berry says there are two fice buildings. Kids have to go
be harvested, it is a dramatic they can continue to use the main reasons ethanol plants back to school. There’s really
shift in what they are used to money they have with them. close or slow production: eco- no other way out of this box.”
eating,” says Don Schiefelbe- “Instead of having to make nomics and storage. Compounding an already
in, whose family raises about the transition in a week, “The ethanol industry has bad situation
1,000 registered Angus fe- maybe we can make it over been running very close to Switching an animal’s diet
males and feeds out around two to three weeks and min- breakeven for several years couldn’t come at a worse time
10,000 head of cattle. “If we’re imize the digestive problems due to federal policy,” he says. as the cattle market contin-
feeding them wet cakes one that may be associated with “The small refiner exemptions ues to fall apart. “The futures
day, and the next we’re not, it the transition,” he says. have caused a lot of uncertain- prices are well below where
can create tremendous havoc.” Depending on how long the ty in the ethanol industry over they were prior to COVID-19,
As they ready to market plant is in limited production the last three years.”
and they weren’t good at that
cattle in the coming weeks, the of the dry product also depends Add to that the effects of point, either,” Robinson says.
last thing Schiefelbein Farms on whether or not Schiefelbein coronavirus on the amount of “When your selling price is
wants to do is mess with an Farms will have to switch to gasoline being consumed, and down, and your cost of produc-
it sets up an even worse sce- tion is going up – even though
nario for ethanol plants to lose your feed was contracted and
money on every gallon they paid for – all of a sudden your
produce. economics are turned upside
“Over the past three years down,” Schiefelbein says.
many plants have seriously And it’s not just distillers’
depleted the amount of cash grains being replaced.
on hand due to the small re- “Even with low corn prices
finer exemptions,” Berry says. right now, you’re also replac-
“They were in a bad position ing or adding other feed costs
before going into the decrease that may be higher priced be-
of ethanol use by as much as cause producers are having to
50% due to nobody driving reformulate a ration,” Robin-
nearly as much as they were son says. “Those added costs
before the coronavirus hit.” are a horrendous hit to an al-
The reduction in ethanol use ready bad situation that cattle
was a very fast reduction, and producers are facing across
ethanol plants were still pro- the country regardless of their
ducing at the same level when feed source.
the pandemic struck. “Due “The price discovery mech-
to this, the storage facilities anism in our markets is com-
started bringing more ethanol pletely broken,” he continues.
in than they were getting rid “It’s cause for concern, and
of,” he says. “Now most storage it has a lot of people asking
is holding as much as it can questions about what’s going
possibly hold, which makes on and what’s really at play
the logistics of getting rid of here. We are going to have to
the ethanol produced very dif- provide some solutions in the
ficult.” market, so that producers re-
As the economic situation ally understand what their
improves, Berry says all of the cattle are worth. Right now,
Nebraska plants plan to come most of those tools are not
back online. working very well.”
However, Cooper says it’s
too soon to know exactly what SF
the recovery is going to look