While we corn growers are all gurgling with joy over the ethanol market, some of our best and most loyal customers are under considerable duress.
A 77 percent jump in the past year has made corn the most expensive since 1996, squeezing profit at Coca-Cola Enterprises Inc. and Tyson Foods Inc. Speculators including Pacific Investment Management Co. are basking in returns that go beyond forecasts made as recently as July.Part of the reason is the furor over immigration. It will be interesting to see if the new Congress and Pres. Bush reach an understanding on how to handle the illegal immigrants already fueling much our resilient economy.
A similar story ran in the LA Times back in July, about Arkadelphia, Arkansas. It was another tale of chicken processing plants, sudden immigration raids, over a hundred workers dragged away, and subsequent damage to the emotional and economic life of a city. The federal raiders got no cooperation, as the story tells it, from local prosecutors or sheriffs, who understand the local circumstances that make such raids a stupid waste of time that doesn't serve their communities, but disrupts them. Arkansas' Republican Gov. Huckabee even donated a grand to a relief fund set up for families hurt by the raid. [More]Between these two forces, I think much of our domestic livestock industry is up for grabs as we grain producers forsake them to become the ethanol sheiks. When Brazil is the place the world goes for chicken and pork instead of the US, we may wonder how we could have allowed this to happen.
Brazil’s world share of exports is expected to drop by one point to 38 percent. Brazil, which has shown annual increases in broiler meat exports over the last six years, is forecast to show a decrease in 2006 exports due mostly to weakening demand in a few of its major export markets. This is a result of economic factors within the country and AI concerns in importing countries. These AI concerns have led consumers to substitute other protein sources for poultry meat. These circumstances have led to an over supply issue in Brazil. With AI concerns expected to decline and as Brazil focuses on using more aggressive marketing strategies on its larger poultry importers, broiler meat exports are expected to rise 2 percent in 2007 to a total of nearly 2.6 million tons. [More]If avian influenza (AI) or bird flu remains a dormant threat, Brazil is poised to be formidable competition to US poultry giants. This will eventually impact our corn market.
And our food prices.
1 comment:
John - As a strong supporter of animal ag in local economies, I am disturbed by the apparent trend of handicapping our livestock producers. We are putting some very burdensome restrictions on our livestock industry in the U.S. - from waste and zoning regulations to the immigration issue. Now our "ag leaders" seem determined to forsake them once again as they chase the holy grail of an ethanol plant in every town in Iowa.
I don't know a lot about the little slice of heaven you live in John, but in my area I drive through small towns every week and I can tell you which local economies have livestock enterprises and which don't just by looking at the vitality of the businesses on main street. I hope to one day say the same thing about ethanol plants, but I am pretty sure that most of the economic benefit will eventually end up in towns like Minneapolis, Brookings and Decatur.
How ironic that in less than two years we have gone from a debate of COOL and mad cow protectionism to a insatiable desire to turn all of our grain products into fuel and sever our ties with the Mid-East oil barons. We are in a global economy and unfortunately, I believe that you are right...someday your Happy Meal will originate in Brazil.
The ethanol proposition is too easy right now, John. A correction of some sort is inevitable and unfortunately many farmers and small-town neighbors will suffer some economic hardships from this "new era" of prosperity in rural America.
Post a Comment