Tuesday, May 26, 2009

Meanwhile, back at the [chicken] ranch...

For corn growers who have forgotten old customers, this message:
It’s well documented that chicken producer margins have suffered during the past 18 months or so which has caused them to cut production. Chicken production for the better part of 2009 has been trending 5% plus below year ago levels. 2009 will almost certainly mark only the fourth chicken output decline since 1961 and by far the steepest. A decrease of around 1.5 billion pounds is anticipated this year which is roughly 6 times more than any other decline since 1961. In short, an historic slowdown in chicken production is occurring. When will chicken output turn around? Probably not anytime soon. Yes chicken breast and leg quarters have risen as of late, but so have feed prices hurting producer profitability. The 2009/10 crop corn and soybean planting remains behind and supplies for both products are anticipated to remain historically tight for the foreseeable future. [More]

 This is my contention with ethanol-worshipers - we have enlisted our government to help us screw reliable buyers of our production.  Heck, we'd starve our entire livestock industry if we could get a 50% blend mandate.

The market, not K street lobbyists should allocate corn supplies. There is responsibility chain that parallels the production chain. All of us are free to finagle what we can from our political process, but the short-sightedness of pushing our livestock industry to the brink just because we can seems wrong to me.

All we have accomplished, I think, is raise our input prices and fixed costs.  In fact, corn farmers have slipped into a role as little more than a conduit between corn buyers and input suppliers - who are remarkably more market savvy than we. Between seed and fertilizer vendors, landowners who can read the media, and competition who can see the bigger picture, producers have built their own future though government fiat without asking if they were capable of being a part of it.
We are now officially tools.


Anonymous said...

Independent livestock (pork,beef and milk) ownership is probably coming to an end ,, everyone I talk too is just trying to figure a way too work themselves out of this "mess"....bankers don't want to finance any producers smaller than 1,000 sows F-F ,,guys with land that can afford to hang on has lost faith in the industry and not many young tigers want to "get dirty"..lot more prestige in running a 16 or 24 row corn planter than wrestling steers or hogs or milking at 5 am 365 days a year for no pay...would be nice too see some good news but don't know where too look,,,, on a personal note we will push our grain operation and just wear out our present buildings --- regards-kevin

Anonymous said...

I am a grain farmer and land owner and am not a supporter of ethanol mandates. Yet, my reading of the tea leaves is that higher energy prices and inflation from the devaluing of the USD will lead to the same higher prices for grains and pains for the livestock sector. As a former dairyman, I feel for you all, but this train wreck seems unavoidable to me. btw, I like chicken and eat plenty.

Anonymous said...

John is absolutely right, let the markets decide and not politics. The government and assorted lobbyists have chosen ethanol over livestock and unless something changes soon we are in for a massive realignment in agriculture. Livestock production as we have known it will be no more with corn and soybeans priced at levels that make for certain losses from feeding. Maybe this is a plot by the animal rights crowd to limit livestock production and the corn guys are just pawns in their strategy.

But then maybe I have become very cynical, what's a good steak or glass of milk in comparison to the patriotic pride corn farmers can feel knowing they are providing fuel for someones SUV. Someone better wave the flag proudly on this one because I won't.