I think we have reached the tipping point for the pork industry. And it is worse than I feared.
I received this e-mail from a hog producer who won't be buying any more $7 corn.
My wife and I are in our Mid 40's with two garde school boys that work on the farm as much as we do. After graduating from college I worked in Ag Business for 10 years before returning to the farm full time. During our 21 years of marriage we have purchased 387 acres and paid it off. We were able to build swine contract grower facilities and paid them off. Two years ago we started a 1200 sow unit, Mortgaged our other assets and secured a contract with a farm family two counties away to finish the pigs. On June 12, 2008, we were notified not to ship pigs on Friday as they could no longer pay for them. Now we are faced with a cash price of $10-$12 per head instead of the contract price of near $50. Working capital ceased to exist. As I have been up front with our Cooperative Lending Firm, I notified our lender of our inability to make our monthly payment. We have never missed a payment in 21 years. His suggestion was to sell all of our land, liquidated our sows and seek off farm employment. 30 Days earlier he told up " they're in it for the long haul." To bad our Cooperative Bank is no longer interested in livestock loans. We are looking at liquidation. My youngest son is in the first year of 4-H and doesn't want to attend the fair next week because he is afraid this lender will repo his garden and puppy. We are hearing of generational livestock family farms in our community that do not know if they will survive the summer. The loan officer has a FSA guarantee on our loan, the crop farmers have the LDP safety net, and we have nothing but speculators driving us off the farm. We need action now as we can't wait for congress to deliberate for weeks. The war between hog farmers, crop farmers and loan officers has begun. It is to bad we are the first casualty.This is only one anecdotal data point, of course. [If any of you have other stories , please forward them to me] But my early read is lenders are panicking and leaping to harsh financial triage that at the very least seems at odds to the words of commitment and trust that have flowed at annual meetings and customer appreciation days where I have spoken.
Meanwhile, another front is becoming more active in our battle with our best customers.
A debate is raging within the state and nation's agriculture industry about the high costs of food and how much ethanol is contributing to it.Grain farmers are not only getting rich, they have effectively decided to join with food critics and lower our meat consumption.
With Nebraska feedlot owners facing feed costs of as much as $300 per head, Nebraska Cattlemen is asking the U.S. Environmental Protection Agency to reduce the nation's renewable fuel standard (RFS) within the Clean Air Act to 4.5 billion gallons.
On the other hand, Nebraska Farm Bureau is urging EPA to deny the recent request from the State of Texas for a waiver of the Renewable Fuels Standard (RFS). [More]