Thursday, July 3, 2008

The Price of Feed is Soaring, and the Price of Food Will Follow

And what do you think the reaction is going to be? A reduction in ethanol or a reduction in the US consumption of meat? Farmers throughout the country face a Fourth of July where big decisions are going to be made--cut costs or go under.

“This used to be 50 bucks for the full barrel,” [David] Hale said, pointing to a barrel of chicken feed.

And now?

“Seventy-five dollars - a fifty-percent increase," he said.

“All these cattle will eat 40 lbs. of feed a day and it went from two cents to nine cents a pound for that feed, that's a big big difference," [Steve] Foglesong said.

Corn prices are at the highest levels they’ve ever been; and meat farmers are hit especially hard.

It takes 2.6 lbs of corn to make one pound of beef or chicken. It takes 3.6 lbs. of corn to make a single pound of pork.

“Chicken feed is supposed to be an idiom for 'cheap,' right?" Hale said.

But not any more. The mountains of corn it takes to feed Hale’s chickens and Foglesong’s cows are getting more expensive, because of increased domestic demand from ethanol plants, higher overseas demand thanks to a weak dollar, increased transportation costs - and let’s not forget tight supplies.

As feed prices soar, the question over how much ethanol we are going to manufacture in this country becomes a hot topic for discussion. Before Iowa came along in the Presidential primary process, you heard a lot of good things--now, you hear virtual silence. The scarcity of materials and the cost of making it make this a bad year for ethanol.
The recent floods in the Midwest wiped out an estimated two million acres of corn and soybean crops.

“The only thing a guy's got the opportunity to do is cut back on the number of cows he's carryin', because he doesn't have any feed for 'em,” Foglesong said. “So those cows go to market."

And that means sticker shock at the grocery stores, as farmers fold under pressure of high feed prices.

Now, if people are already facing a dilemma between food and gas for their car, how much do you want to bet they're going to cut down on expensive foods--and that means red meat and other high cost staples of the dinner table.

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