Importation of Dried Distillers Grain with Solubles - Scoping Study

Summary

The objectives of the study were: 

To assess the future supply of DDGS available for import, given the current development of ethanol production capacity in the USA. 

To assess the potential usage of the product in an Eastern Australian drought situation. 

A preliminary assessment of the quarantine risk. 

Assessment of Future Supply of DDGS available for Import Key points are: Estimates of current production of DDGS are approximately 7-8 million tonnes with estimates of new production coming on stream of approximately 5.4 million tonnes with the new ethanol capacity that is being built. Exports of DDGS in 2005 were 970,000 tonnes with a 36% increase in showing in the figures for Jan-June 2006 compared to the previous period in 2005. New ethanol plants are mainly designed to be able to produce DDGS, contrary to our expectations that most plants would be co-located with cattle operations. Our assessment is that it is unlikely that there will be a fall in DDGS production unless there is a calamitous fall in the oil price, and that it is likely there will be significant extra new capacity coming on line if oil prices remain high. 
​Our conclusions from this assessment are that: 
It is clear from the data that there will be significant volumes of DDGS produced from the United States over the coming years. It is also clear that with the United States already exporting significant volumes of DDGS, the rapid increase in production is likely to result in extra exports. This needs to be tempered against the fact that increased research is going into animal feeding of DDGS in the United States. However it is likely that the DDGS price will be linked very closely to corn prices. Therefore significant volumes are likely to be available for export at a small price premium above the local market. Potential Usage of DDGS in Eastern Australia 
Key points are: 
New research is demonstrating that quite high inclusion rates of DDGS can be used in dairy cattle, beef cattle and pigs. Poultry are less able to utilise DDGS. In a normal grain pricing situation DDGS would have to be available for diets in Australia at $190 a tonne. Given that FOB prices for DDGS in the USA are around $170 a tonne before any possible quarantine costs are attached to the handling of the product this is clearly not viable. In a severe drought situation DDGS could be added to diets at $270 a tonne which makes the product far more viable depending on transport costs. There are difficulties with adding DDGS to diets. DDGS is of a much lower bulk density than wheat which will make its costs of transport higher. In addition higher inclusion rates are reported to slow down pellet presses, and cause handling problems for feed mills. We have calculated various scenarios for the use of DDGS with a potential to utilise 33,300 tonnes a week in livestock diets Our conclusions for this assessment are: It is clear from these possible scenarios that there is considerable scope for importation and utilisation of DDGS into Australia in the case of severe drought, especially if there is a physical shortage of feed grains for the livestock industries. It is clear that the importation of DDGS during normal feed pricing years will not be a viable option. More work needs to be done on the delivered pricing into Australia 
Preliminary Quarantine Assessment Key points: 
The milling and processing of maize in ethanol plants subjects the grain to physical, temperature, pH and alcohol conditions that are likely to make the DDGS virtually sterile as it is produced, with little likelihood of viable weed seeds, nematodes, or insects. There are significant differences between ethanol plants in the processes, especially as operators are trying to reduce heat inputs to reduce energy costs and produce a better quality DDGS product. There will still be significant quarantine issues to be overcome in the transport part of the export process with identity preservation/cleanliness of transport facilities and vessels being a major issue if there are to be no further treatments. Our conclusions from this assessment are: There will be significant reductions of, and possibly complete elimination of, the quarantine risks of DDGS compared to whole maize from the USA as determined at the end of the ethanol plant process. 
​The key quarantine risks are therefore more likely to be in the storage and transport processes where DDGS can become contaminated with seeds and pathogens due to common freight systems with domestic and export grain movements These external quarantine considerations will not be as easily overcome as some in industry may think and may impose significant restrictions in terms of locations where DDGS can be accessed, or costs of obtaining and transporting the product. Import applications may have to be done on a plant by plant basis