SIOUX FALLS - Corn's move from food source to energy provider might contribute to higher costs of feeding cattle, but some dairy farmers and beef ranchers are finding advantages to being close to an ethanol plant.

Converting corn into ethanol produces a byproduct called distillers grains, which can be used as high-protein livestock feed. Most are dried so they can be shipped across the country and overseas, but cattle ranchers within 50 miles or so from an ethanol plant can save money by buying wet distillers grains.

Eric Nelson, who operates two feedlots in western Iowa, buys modified wet distillers grains from Little Sioux Corn Processors ethanol plant, which is just down the road from his Marcus, Iowa, feedlot.

Nelson said he started using the grains for 20 percent of his rations but has since upped his mixture to 30 percent. It has worked well for his operation, and the cattle seem to like it, too, he said.

"It smells good," Nelson said. "It looks like something you'd want to put on your breakfast cereal."

Drying wet distillers grains involves separating the liquid from the mash, partially dehydrating that liquid into a syrup and adding it back into grain. That costs money, so plants can pass the savings and lower shipping charges to farmers and ranchers, said Don Endres, chairman and chief executive officer of Brookings-based VeraSun Energy Corp.

Endres said dairy farms and feedlots are building or expanding around VeraSun's plants.

"They can buy feed more economically if they're located near an ethanol facility," Endres said. "You take the transportation out."

Wet distillers grains are cheaper than dried distillers grains, but they have a short shelf life.

The grains will begin to grow mold within 5-7 days in the summer unless they're in bunkers or silo bags, said Ken Kalscheur, an associate professor of dairy science at South Dakota State University.

Smaller operators who might not be able to use a truckload before the grains spoil can treat them with a moderate level of a preservative which can extend their shelf life for about a week, Kalscheur said.

Sharing also is an option.

"If you can split a load with the neighbor down the road, that's a great way to do it," he said.

Dairy farmers typically use wet distillers grains for about 10 percent of the feed mixture, although some research has shown that it could be used for up to 20 percent, Kalscheur said.

Dairy feed contains many different components and cattle will sometimes sort through it. Adding wet distillers grains can help ensure consistency in an animal's diet by helping to bind the mix.

"With a wet product, it's somewhat like a glue kind of sticks things together," he said.

When ethanol plants turn corn into fuel, the process uses only the starch, which is about 70 percent of the kernel. The protein, fiber and oils left behind are concentrated into distillers grains.

A 56-pound bushel of corn produces about 2.8 gallons of ethanol and 17 pounds of distillers grains, according to the American Coalition of Ethanol.

Endres said a recent study found that ranchers' number one reason for not using distillers grains are the product's lack of availability.

"The market works, so as we bring on additional supply of product, the livestock producers are stepping up and taking advantage of it, as we'd expect them to do," Endres said.