Soaring corn prices hit US cattle farmers
Wednesday, 26 September 2007
SALMON, Idaho, Sept 25 (AFP): America's drive for alternative sources of energy is proving an expensive challenge for cattle farmers who are struggling to pay for traditional feed as the price of corn soars.
Corn has traditionally made up 40 per cent of the diet of cattle at the Agri Beef Company in Idaho, but earlier this year the firm decided to cease relying on the grain after the price per bushel doubled.
The price rises have been driven by demand for homegrown corn to make ethanol, a biofuel whose synthesis has been sweetened by federal subsidies.
The ethanol boom has helped boost the bushel price for corn at a time when the US Department of Agriculture predicts more acres of corn than ever will be planted in such Corn Belt states as Illinois, and when USDA projections show commodities such as soybeans are poised to be displaced.
What is good news for grain farmers is grim news for cattle, hog and poultry producers, who buy the majority of the nation's feed corn and have counted on low prices to keep costs down from feedlot to food store.
They say the dual challenges of a surge in ethanol production and a strong export demand for corn means everyone from breeders along rural byways to consumers in urban centers will feel the pain.
"People will be paying more for cornflakes and more at the meat counter," said Rick Stott, Agri Beef vice president.
Increasingly, cattle farmers are having to be inventive in coming up with cheaper feed sources to corn. Agri has begun feeding its cattle with potato by-products including tater tots, hash browns and peelings.
Registered Angus breeder Jim Skinner said soaring grain and fuel prices have led to a 40-per cent rise in expenses.
"Oh man, it's just getting where it's tough," he said.
In the cattle industry, finishing operations bear the brunt of climbing feed costs because cows must nearly double in size before being sent to slaughter.
The feedlot owned by Simplot in southwest Idaho must fund the fattening of more than 100,000 cattle.
Simplot's Scott McNeley said beefed up corn costs have pushed the operation's feed bill to an all-time high.
And the inverse relationship between grain prices and the price per pound feedlots are willing to pay means ranchers are poised to collect less profit per calf.
Ranching consultant Bob Loucks has added his voice to the chorus of critics claiming the government is unfairly underwriting ethanol at the expense of animal producers, in essence pitting one agricultural sector against another.
At the same time, Loucks is a true believer that producers must possess entrepreneurial acumen.
"If you are not a business person, you won't stay in business," said Loucks, who ranches in Idaho's Lemhi River Valley.
He is among livestock experts who say the industry is undergoing a dramatic shift that, in a rare twist, has been brought on by demand instead of supply.
Corn has traditionally made up 40 per cent of the diet of cattle at the Agri Beef Company in Idaho, but earlier this year the firm decided to cease relying on the grain after the price per bushel doubled.
The price rises have been driven by demand for homegrown corn to make ethanol, a biofuel whose synthesis has been sweetened by federal subsidies.
The ethanol boom has helped boost the bushel price for corn at a time when the US Department of Agriculture predicts more acres of corn than ever will be planted in such Corn Belt states as Illinois, and when USDA projections show commodities such as soybeans are poised to be displaced.
What is good news for grain farmers is grim news for cattle, hog and poultry producers, who buy the majority of the nation's feed corn and have counted on low prices to keep costs down from feedlot to food store.
They say the dual challenges of a surge in ethanol production and a strong export demand for corn means everyone from breeders along rural byways to consumers in urban centers will feel the pain.
"People will be paying more for cornflakes and more at the meat counter," said Rick Stott, Agri Beef vice president.
Increasingly, cattle farmers are having to be inventive in coming up with cheaper feed sources to corn. Agri has begun feeding its cattle with potato by-products including tater tots, hash browns and peelings.
Registered Angus breeder Jim Skinner said soaring grain and fuel prices have led to a 40-per cent rise in expenses.
"Oh man, it's just getting where it's tough," he said.
In the cattle industry, finishing operations bear the brunt of climbing feed costs because cows must nearly double in size before being sent to slaughter.
The feedlot owned by Simplot in southwest Idaho must fund the fattening of more than 100,000 cattle.
Simplot's Scott McNeley said beefed up corn costs have pushed the operation's feed bill to an all-time high.
And the inverse relationship between grain prices and the price per pound feedlots are willing to pay means ranchers are poised to collect less profit per calf.
Ranching consultant Bob Loucks has added his voice to the chorus of critics claiming the government is unfairly underwriting ethanol at the expense of animal producers, in essence pitting one agricultural sector against another.
At the same time, Loucks is a true believer that producers must possess entrepreneurial acumen.
"If you are not a business person, you won't stay in business," said Loucks, who ranches in Idaho's Lemhi River Valley.
He is among livestock experts who say the industry is undergoing a dramatic shift that, in a rare twist, has been brought on by demand instead of supply.