Abstract: A high quality animal feed stuff is produced by thermal dewatering of liquid stillage obtained from fermentation of grain raw material and distillation of the fermentation product. The liquid stillage is mixed with particles of already dewatered product and the mixture is granulated in a granulation device to form essentially spherical granules with a dry substance content of 50-70% by weight, the major part of the granules having a particle diameter in the range of 2-6 mm, whereafter the granules are dried by being conveyed as a porous bed in a controlled path in contact with hot gas of a temperature less than 100.degree. C., and whereafter a part of the dried granules with a desired particle size are discharged and the remaining part of the granules after possible disintegration are recirculated to the granulation step.