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Waiting for facts

WASHBURN, N.D. - Clark Price has gotten his first load of distiller's grains out of the Blue Flint Ethanol plant in nearby Underwood, N.D. He's among a group of cattlemen in the area anxiously waiting to see the outcome of a feasibility study on ...

WASHBURN, N.D. - Clark Price has gotten his first load of distiller's grains out of the Blue Flint Ethanol plant in nearby Underwood, N.D.

He's among a group of cattlemen in the area anxiously waiting to see the outcome of a feasibility study on the economics of tying a feedlot with the new Blue Flint Ethanol plant. Results of the study should be available by April with a final report by October.

Blue Flint fired up its 50 million-gallon plant in mid-February and Price got some of its first distiller's grain output. Under full production, the 50 million-gallon-per-year ethanol plant will produce 420,000 tons of wet distiller's grains, enough to feed 225,000 head of feeder cattle annually.

All of this is visible on the northern horizon, 10 miles away from the Price ranch.

When the ethanol project first was disclosed, Price and other cattlemen in the area approached Al Christianson, business development director for Great River Energy in North Dakota, one of the owners of Blue Flint, about potential synergies.

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That led to the study of the feasibility of establishing an integrated beef cattle feedlot and anaerobic digestion system to complement Blue Flint Ethanol's plant.

"They're kind of looking at what kind of economics of scale would be - what size. What the profitiablity would be with a feedlot that isn't near a kill plant," Price says.

A new opportunity

The ethanol plant offers new opportunities for cattle, and the Prices have been around long enough to know how big all of this is.

The Prices have the land in the Missouri River bottomland since the 1960s, and installed a feedlot in 1972. Doug Price farmed with two brothers in Price, N.D., north of Mandan, until 1986, when he moved his family up there.

Price Brothers Ranch operation includes three brothers - Clark Price, 41, and his brothers, Lewis, 40, and Clay, 38. Their father, Doug, is 65.

The Prices have about 1,000 cows among them. They finish all of their Simmental-Red Angus calves through the feedlot and buy some calves every year to finish. Price Brothers runs about 1,000 head at a time on two turns per year - about 2,000 in all.

"I'd say we're small to medium of the ones that are feeding cattle to finish," Price says.

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Feeding byproducts is nothing new.

The Prices used wheat middlings from Dakota Growers Pasta Co. in Carrington, N.D., shortly after the place opened. They've also used beet molasses from Grand Forks, N.D., at American Crystal Sugar Co., and distiller's grains from the Archer Daniels Midland plant in Walhalla, N.D.

"We've been getting stuff that was 35 percent dry or 65 percent moisture," Price says of the distiller's grains.

Price says his first load of distiller's grain from Blue Flint Feb. 21 was largely the same as what he'd been receiving from Walhalla with one exception.

"It doesn't have the 250-mile road trip," Price says. "The product up here is a modified product, meaning its 50 percent dry matter."

The distiller's grain transportation cost ranged from $16 to $22 a ton from Walhalla, but that was with a backhaul of lignite coal that had been going to the University of North Dakota in Grand Forks, which has since been discontinued. There still is a backhaul for coal to the Alchem ethanol plant in Grafton, N.D.

Blue Flint program

Christianson, who also happens to be the mayor of Washburn, N.D., says he was glad to hear interest from area cattlemen. The first step was to go to the McLean County, N.D., to make sure the state model ordinance was in place.

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One question is whether a feedlot might be built on "reclaimed" mining land or whether reclaimed land might be tailored specifically for a project.

Then, North Dakota State University experts on animal feeding and anaerobic digesters were asked for input on how to build a model feedlot next to an ethanol plant.

The group won a $41,250 grant to study the issue, which helps to fund a $115,000 study. Greg Lardy of NDSU's animal and range science department is heading the steering committee for the study. Representatives of Great River Energy, the Falkirk Mine, Blue Flint Ethanol, McLean County, the North Dakota Dairy Coalition and the Underwood and Washburn area economic development associations are involved.

The study will look at feedlot sizes of 20,000 to 50,000 head. It could be close to the ethanol plant, or five or 10 miles away, depending on the study results, Price says.

"The study includes not only the feasibility of the project, but also a business plan," Christianson says.

As part of the project, Shane Goettel, head of the North Dakota Commerce Department, says he'd like an economic impact study.

And the North Dakota Dairy Coalition wants information on the same type of plan for large-scale dairies.

"Then local ranchers can look at it and see if this is a viable business plan, and they can actually build it," Christianson says.

Blue Flint would contemplate giving a feeder group a 10-year contract on wet distiller's grains to take some of the cost variability out of the deal, he says.

Christianson says the study should have applications with other ethanol projects in the state - Spiritwood, Hankinson, Richardton.

How big is this?Price notes that an estimated 60,000 cattle currently are finished in the state, so a feedlot of this size would be a considerable increase. It probably would be a bit larger than a feedlot in Gascoyne, N.D., which may be the largest in the region.

"It just seems to make sense to do something alongside this," Price says. "The economics of both the ethanol plant and a feedyard should benefit. A feedlot can be a constant outlet for their distiller's grain and the feedlot a constant supply."

Results should be available in the second quarter of 2007. Price has been involved with the study, just to provide a producer input from time to time.

Price says are great potentials with distiller's grains, but also limits.

"If you're finishing or backgrounding cattle, it almost has to be in there anymore, with all the availability and the cost of corn," he says. "It replaces corn one-for-one. A pound of corn on a 100 percent dry matter is replaces that up to a certain level."

Most finishing rations can get along without any protein supplement other than distiller's grain.

"People take their hay out of the ration and put in corn stover for roughage," he says.

Distiller's dried grain tends to "safen" the ration against digestion problems and rumen disorders, he says.

Price says the value of distiller's dried grain is equal to about 115 percent to 120 percent of the corn price on a 100 percent dry matter basis. Most of the distiller's grains now are priced at less than that, and that situation is likely to improve as distiller's grains become more abundant.

Price uses a quick equation to determine whether distiller's grains are a good buy.

In an example, he starts with the price of the distiller's grain on a dry-matter basis. If the distiller's grain is $50 on a 50 percent moisture basis, then the dry value is $50 divided by 0.5, to equal $100 per ton.

Multiply that $100 by 0.845 (dry matter equivalent value of corn). Divide that by 2,000 (pounds per ton). Multiply that times 56 (pounds per bushel of corn).

"Then you get the value on corn, compared to the value of the distiller's grain. If you get above that, probably buy corn," he says.

When a ration gets above 40 percent to 50 percent distiller's grain on a dry-matter basis, that's as high as Price wants to go. Average daily gain goes down as well as dry-matter conversion. Another consequences of a higher rate is that it increases the phosphorus levels in the manure, which requires more land for spreading.

"It's all manageable, but it needs management," Price says.

Price knows there are some people in every community who are leery about expanding animal agriculture. People are worried about smell.

"I think if you've got a responsible, well-run operation, you can coexist and never know they're there. I envision something like that. Unless you drive on the yard, you shouldn't know it's there."

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