October 3, 2012 —
Last week an obscure British organization called the National Pig Association launched a wave of stories here in the U.S. with a press release that said, “A world shortage of pork and bacon next year is now unavoidable.”
A few days later, another wave of stories insisted that there will be no shortage of bacon, but instead the cost of bacon will rise enough to convince some consumers to switch to another form of meat. That was argued persuasively in the online publication Slate (tinyurl.com/dyhdm2y), which said, “In the short term, there’s really nothing to be done but learn to cook more chicken.”
The bacon scare was connected to the widespread drought in the U.S. this summer, which devastated the corn and soybean crops, and has so far led locally to a 60% increase in the cost of corn over three months, and which, according to Adam Henning, the sales manager at Narrowsburg Feed and Grain, is bringing a bit more grief to local dairy farmers, who are already suffering from other problems.
He said corn, like other commodities, is traded on the Chicago Board of Exchange and is produced once a year at harvest, which is a process that is now going on. Henning said at this time of year the United States Department of Agriculture (USDA) estimates how much corn is left, and that figure as of September 28 was less than 1 billion bushels, which is slightly less than the country uses in a month, and “that’s been a big concern.” A report from the USDA on September 28 caused the price to soar to its daily limit, which was about $.40, to a total of about $7.56 a bushel; in 2009 and 2010, the price was hovering around $3.75.
He said, “Three months ago, we put in a record corn crop, everything was looking good, the commodity prices were coming down, and it was looking like it was going to be a decent year, as far as profitability on the farm was concerned.”
Then the drought set in and a large part of the country’s corn crop was devastated. Ironically, locally it was a good year for corn. But the price of the ingredients Henning buys are dictated by the national market so feed prices have increased 60%.
Meanwhile, he said, farmers are caught in a bind because while milk prices are gradually increasing, they do not rise nearly as fast as the cost of grain. He added, however, “The milk price is coming up, and if you look at the futures market, it may hit all time highs this winter. But the farmers have been paying the higher prices for grain for three months.”
But is the U.S. corn situation so dire that the country will be importing grain from elsewhere on the planet? Henning said this country exports a large percentage of its corn crop and that will continue. “China is still buying our corn and soybeans; they can’t feed a billion people.”
Then there is the question of ethanol in gasoline. There is some speculation that because of the corn shortage, the Environmental Protection Agency will drop its requirement that a certain amount of ethanol must be added to gasoline. But, Henning said, even if the mandate was dropped, refiners would continue to add ethanol to the mix because of the economics of the business.
In any case, as the price of corn continues to go up, big producers in western states are looking to alternate forms of feed. A Reuters news story on the matter titled, “Sweet times for cows as gummy worms replace costly corn feed,” related the story of one rancher who got a good deal on a haul of ice cream sprinkles that he fed to his dairy herd. More commonly though, the article said, producers are turning to such things as “cottonseed hulls, rice products, potato products and peanut pellets.