WINTER 2012 ISSUE


All sides win



When POET started separating corn oil during the ethanol process, it also created the ability to offer a variety of fat levels in their DDGS products offering customers the unique option to choose their level.




It was by insight and innovation – not by accident – that over the past 16 years, POET meticulously crafted its Dakota Gold distillers dried grains with solubles (DDGS) as the industry standard. And it is no accident that POET Nutrition is now offering three varieties of its Dakota Gold product as the company extracts more valuable corn oil during the ethanol production process.


The result? Benefits to POET via expanding market channels for oils and advantages to POET’s valued customers with three varieties of Dakota Gold to more precisely meet animal nutrition needs. A carefully calculated win-win.


A Highly Consistent Product


Carefully calculated decision-making has been a hallmark of Dakota Gold product innovation. Over a decade and a half ago, the company had already begun positioning Dakota Gold as a high-quality, consistent product. That sort of foresight paid


off and will continue to do so, says


Clayton Vaughan, Director of Business Development for POET Nutrition.


Vaughan is responsible for the marketing of POET’s non-ethanol co-products, the largest volume of which is Dakota Gold DDGS. He believes POET’s emphasis on product research on everything from traditional livestock and poultry species to aquafeed applications has made it the industry leader. Its ability to brand its product and eliminate the variability that has plagued the DDGS industry has underscored that ranking.


“That’s what we deliver each time we make a sale to a customer. It’s a highly consistent product whether sourced from a POET biorefinery in Indiana or a POET biorefinery in South Dakota,” says Vaughan.


A New Line


Dakota Gold is now taking that industry lead to new heights. The newly expanded product line includes Dakota Gold, with 7 percent fat content, a DDGS product ideal for both swine and poultry; Dakota Gold High Fat, with 9 percent fat, also targeted at swine and poultry, but of particular interest for broiler diets; and Dakota Gold Low Fat, with 5 percent fat, designed for dairy cows.


Dr. Kip Karges has served as Technical Services and Research Director for POET Nutrition for the past seven years, and he also sees the newly expanded Dakota Gold product line as the natural progression of a product category leader.


He points to what he describes as a huge demand for oil going into biodiesel and realization that a lot of the oil in DDGS can be removed and put into the biodiesel stream.


“There are probably opportunities to get into the food-grade industry or other industry where the oil could be utilized for dyes, paints, and industrial-type uses,” he adds. “These are some of the other things we will potentially be looking at, but currently the oil is going into biodiesel or being sold back to the feed industry.”


Karges says POET found a way to lower the fat content more than other companies.


“We’ve figured out how to get it down to 5 percent. Consistency is what we’re all about,” he says, adding that POET looked not only at how low it could reduce the fat but whether it could be consistent in doing so as well.


The ability to produce a much lower fat product meant a change in the nutritional profile of Dakota Gold.


“Typically in the past, we ran 10 percent fat. So it’s changing how we do business from the standpoint of who our primary customer is going to be,” says Karges.


Previously, the bulk of Dakota Gold was used in monogastric diets, though there was always a significant amount going into dairy.


While dairy rations are the target for the new Dakota Gold low-fat product, POET Nutrition has developed the middle and higher fat varieties of Dakota Gold to address the nutritional needs of the monogastric animal.


Economical Dairy Diets


Vaughan says Dakota Gold’s newly


expanded product line will continue to provide customers with a product


that sets itself apart in the marketplace.


“If you were to go back three years ago, there was really only one standard DDGS and that was 25 percent protein with 9 to 10 percent fat,” he explains.


The ethanol industry’s shift to extracting more oil resulted in some disadvantages for animal nutritionists who were finding commodity DDGS in the marketplace with a tremendous amount of variability in protein and fat.


“POET’s strategic decision was to redefine for the industry what these new products are going to look like and develop a new product category of reduced-fat DDGS,” says Vaughan.


Unique Value


Vaughan says POET’s ability to market a truly low-fat DDGS serves to further separate the company in the marketplace, as very few ethanol plants can produce DDGS with fat content that low.


“By providing a low fat DDGS, dairy cows can now consume more DDGS than if they were consuming regular distillers grains. This feature is very unique to POET – that we can consistently offer low-fat DDGS to allow dairy farmers to feed higher levels without lower milk fat,” Vaughan says.


Most dairies today feed some form of distillers grains, but now that POET is able to offer consistent, low-fat DDGS, it is likely even more of the product will be used in dairy rations, helping dairy producers build more economical dairy diets, since DDGS is less expensive to incorporate than corn.


Trending towards DDGS


That cost advantage is evidenced by trends in animal rations over the last several years. In October 2011, the USDA Economic Research Service reported that on average for the most recent five crop years, 2006 through 2011, one metric ton of distillers grains substituted for 1.22 metric tons of corn and soybean meal combined. The report noted that corn and soybean meal quantities fed in the U.S. have moderated or declined in recent years, due in part to the substitution of DDGS.


Last crop year, DDGS replaced soybean meal as the number two most-fed feedstuff, second only to corn itself. USDA predicts further substitution of soybean meal in the feed arena as the percentage of dairy cattle, swine and poultry rations utilizing DDGS continues to grow.


“We’re already seeing customers embrace this new product and start to use it at higher inclusion levels within total feed rations,” Vaughan says, pointing out that POET doesn’t co-mingle its DDGS products from different plants and is willing to provide customers with complete product nutrition profiles from all three of its Dakota Gold products.


“We believe product segmentation will help customers determine which type is best for them and give them confidence they are getting what they want and are able to specifically formulate diets to exact crude fat levels,” he adds.


Product Confidence


It’s that product confidence that keeps Jim Garmatz, Senior Buyer at Viterra/Hi-Pro Feeds, Friona, Texas, turning to Dakota Gold. His clientele is about 60 percent dairy.


“First of all, you have to start with the main product, which is the best in the country – the best product around as far as quality is concerned,” he relates. “Second of all, the diets we service are primarily in dairy feeds and Total Mixed Rations (TMR) used on the dairies. They require different fat levels because the milk cow herself can just assimilate certain levels of fat. With POET going out on a limb to establish different fat levels, well, it’s a real service to dairy. We use all three kinds right now.”


Garmatz says it’s an advantage to be able to react to the needs of dairy nutritionists with the exact product they need. And even his cow-calf customers can benefit since fat levels have a lot of influence on how easily feed can be made into pellets or cubes.


“They’ve got a very quality product and a very quality organization. I have just been impressed by them, and the quality is just phenomenal. I’ve gone out of my way to do business with them. They are just top notch people,” he says.    





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