Flood Increases Cost of Raising Livestock; Farmers, Consumers Likely to Feel Pinch From Crop Damage

By RICK BARRETT

With 22 Wisconsin counties declared disaster areas because of the recent floods, farmers across the state are struggling with poor crops and high livestock feed prices that threaten to put some people out of business.

Crop insurance adjusters are busy assessing damages, and some replanting is under way where the water has receded, according to the weekly Wisconsin crop report issued Monday by the United States Department of Agriculture in Madison.

There are still fields with standing water, and the full extent of crop damage isn’t known yet, the report noted.

“Many comparisons have been made between the floods of 1993 and 2008,” according to the USDA.

Statewide, the average corn height was 15 inches last week. That compared with 29 inches a year ago and 19 inches for the five-year average at this time of the summer.

“On the upside, warmer days with sun and mild-to-moderate winds helped dry up some areas affected by flood waters,” the report noted.

In the latest round of food inflation, beef, pork, poultry and dairy products are expected to get more expensive as livestock owners go out of business or are forced to slaughter more animals to cope with rising feed costs.

“There’s definitely liquidation of livestock happening,” and that will cause meat prices to rise later this year and into 2009, said Rod Brenneman, vice chairman of the American Meat Institute, and president and chief executive of Seaboard Foods, a pork supplier in Shawnee Mission, Kan.

Brenneman’s cost for feeding a single hog has shot up $30 in the past year because of record-high prices for corn and soybeans, the main ingredients in animal feed. Passing that increase on to consumers would tack an extra 15 cents per pound onto a pork chop.

It’s a similar story for U.S. beef producers, who now spend a whopping 60% to 70% of their production costs on animal feed and are seeing that number rise daily as corn prices hover near an unprecedented $8 a bushel, up from about $4 a year ago.

“This is not sustainable. It’s just not economically feasible” to raise cattle based on the current corn price, said Dan Jacobson, a beef farmer from Viroqua and a member of the Western Wisconsin Beef Producers Association.

Costs trickle down

Corn prices were already rising before the floods that engulfed 2 million or more acres of corn and soybean fields in Wisconsin, Iowa, Illinois, Indiana and other key growing states, sending world grain prices skyward on fears of a substantially smaller corn crop.

In many cases, the high grain prices have resulted in livestock farmers losing money on every animal they raise.

“We are fighting a losing game,” said Jacobson, who has been raising beef cattle for more than 30 years.

“Here in Wisconsin, our beef herds are small and our feed costs are high. As farmers, we buy everything at the retail price and sell everything at a wholesale price. It’s a bad combination.”

The government will give a partial idea of how many corn acres were lost before the end of the month, but experts say the trickle- down effect could be more dramatic later this year, affecting everything from Thanksgiving turkeys to Christmas hams.

With high animal feed prices, Wisconsin pig farmers are losing between $5 and $10 per animal taken to market – something that won’t be sustainable much longer.

The losses are expected to increase before farmers are driven out of business and, eventually, market prices rebound.

“A lot of farmers are contemplating what their future will be in pork production. They have to decide whether to cut back production to get through the hard times, or to get out of the business altogether,” Wisconsin Pork Association spokeswoman Tammy Vaassen said. Higher feed prices will eventually filter through to the cost of milk, cheese and yogurt, since 65% to 75% of a dairy farmer’s production costs are for feed.

“I have a great deal of empathy for anyone who has to purchase feed for a lot of cows,” said Richard Cates, a Wisconsin Department of Agriculture, Trade and Consumer Protection board member.

Cates raises grass-fed beef on a farm near Spring Green. His business has thrived as more consumers want to know exactly where their food comes from and how it is raised.

Given the high feed prices, more farmers might turn to raising cattle on pastures rather than buying corn and soybeans.

“It’s the least expensive feed there is,” Cates said.

The Associated Press contributed to this report.

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