As the summer’s drought worsens, the economic impact on livestock producers is growing ever more pessimistic.
As corn prices soar in direct response to predicted harvest shortfalls, ag economists are predicting that the feed cost necessary to bring a single broiler chicken to maturity could rise by as much as 50%. For an industry operating on the slimmest of profit margins—and one that has fueled its growth at least partly on its cost-competitiveness versus beef and pork—that’s a devastating development.
Some experts predict that the rise in corn prices will cost the average broiler complex as much as a million dollars in added operating costs—that’s $1 million a month.
The impact of higher feed costs on all of production agriculture is getting increasingly grim. But the drought’s effect on commodity prices isn’t limited to animal feed. Even fruit and vegetable growers are feeling the heat.
According to an Associated Press report, attendance at most farmer’s markets across the Midwest is estimated to be down by as much as one-half, versus last year. The decline is blamed on a combination of consumer skepticism about the quality and quantity of products for sale and the searing heat that tends to keep many people indoors in front of an air conditioner.
And that’s on top of the economic devastation that the parched farm fields and unrelenting heat has had on the growers’ productivity. It’s bad enough that thousands of farmers are suffering through poor crop performance and likely stunted harvests, but when your customers don’t even show up to purchase what product you do have for sale, that’s a double-barreled disaster.
There is one other drought-related development that is truly an eye-opener. As news builds about rising meat and poultry prices at retail, due to higher production costs on farms and feedlots, the “solution” some commentators are dreaming up become truly bizarre.
Maybe the heat is getting to them.
For example: A widely publicized article on Slate.com titled, “Drought Hedge: Fake Meat,” delivers an economics “lesson” that you don’t need to be smarter than a fifth grader to debunk.
“Growing corn and then eating the corn turns out to be a pretty efficient way of translating corn into calories,” wrote Slate’s economics correspondent Matthew Yglesias. “An alternative method—much less efficient but wildly popular nonetheless—is to feed the corn to animals and then eat the animal. So meat consumption ends up being very intensive in its dependence on basic commodity inputs like the increasingly scarce corn and soy.”