BIOFUEL CO-PRODUCTS AS LIVESTOCK FEED Opportunities and challenges FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS

Many countries have adopted policies that support expanded production and use of liquid biofuels for transportation. These policies are intended to enhance domestic energy security, spur economic development and reduce emissions of greenhouse gases (GHG) and other pollutants. Biofuel policies, along with changing energy market fundamentals, have contributed to a significant increase in global biofuel production in recent years. While considerable research and development is under way to commercialize new types of biofuel and feedstocks, the two primary biofuels produced globally today – ethanol and biodiesel – are predominantly derived from agricultural commodities, such as grain, sugar and oilseeds. The use of certain feedstocks for biofuels production also results in the co-production of animal feed. Globally, these animal feed co-products are growing in volume and importance. The increased use of agricultural commodities for biofuels is generally expected to contribute to marginally higher costs for certain livestock and poultry feeds, though the impacts are shown by the literature to be modest in nature and there are offsetting effects. Increased substitution of co-products for traditional feedstuffs in feed rations helps mitigate potential input cost increases faced by livestock and poultry producers. Further, increased agricultural productivity and output has ensured that the global supply of crops available for non-biofuels uses has continued to grow in the long term. Growth in the use of agricultural commodities for biofuels is expected to continue in the next 10 years, but with growth rates slowing in key producing countries as government-imposed limits on grain use for biofuels are reached and new non-agricultural feedstocks are commercialized. Biofuel co-products as livestock feed – Opportunities and challenges2 tax exemptions to encourage biofuels use. Additionally,a 2003 European Commission (EC) directive called formember states to ensure biofuels represented 2 per-cent of petrol and diesel fuel consumption by 2005 and5.75 percent by 2010. A 2009 EC directive establishedthat 10 percent of energy used for transportation in theEuropean Community by 2020 must derive from renew-able sources, such as biofuels. Many other countries,including Canada, China, India, Japan and South Africa,have in recent years enacted blending requirements orother policies supporting biofuels production and use(Nylund et al., 2008). Energy market factorsWhile government policy has played an important role instimulating growth in global biofuels production and con-sumption, demand for biofuels also has been acceleratedby global economic and energy market forces. Declining FIGURE 12001–2009 global biofuels production by nation or region Source: U.S. EIA, 2010• Biofuels policies, along with changing energy market fundamentals, have contributed to a significant increase in global biofuel production in recent years. • The two primary biofuels produced globally today – ethanol and biodiesel – are predominantly derived from agricultural commodities, such as grain, sugar