Livestock farmers hurt by soaring grain prices

(CBS News) CENTRAL INDIANA - There is new evidence of the toll of the worst drought in more than 50 years: The government says nearly half of the corn crop is now in poor or very poor condition, and the World Bank raised new concern about the cost of food as grain prices soar.

"The forecast for today is essentially the same forecast we've had for most of the last three months -- roughly about 90 degrees, sunny, with about a 20 percent chance of rain. It's just that that 20 percent chance of rain has never materialized," said David Hardin, whose family has been farming in central Indiana since John Quincy Adams was president.

"Even if we had rain now, it will come too late to help the majority of the corn crop," Hardin added. "There are large areas in our fields that will yield essentially nothing."

In a normal year, he raises more than enough corn to feed his 12,000 hogs.

"We're actually having to go out and buy corn on the open market to feed our hogs through next year," Hardin said.

He said it's not just the weather that's squeezing him.

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Forty percent of the national corn harvest last year went to ethanol production under the federal government's renewable fuel standard, requiring petroleum companies to buy a minimum amount of ethanol to blend into gasoline supplies.

David Hardin, along with many of his neighbors, wants the government to waive the requirement during this drought so he can compete fairly for the supply he needs instead of paying sky high prices for what little is left.

The ethanol industry opposes any changes and says its consumption of corn is down nearly 14 percent in just the last six weeks.

"This is the worst I have ever seen in my lifetime and I hope it stays the worst that I've ever experienced," Hardin said.

Experts on the ethanol market say a federal waiver is extremely unlikely this year. But if the drought continues, it could tee up a real battle next year between ethanol industry that helps to power our cars and the livestock farmers who produce the meat we eat.

[carlotta444]

instead of shrinking already edible protein through inherently cruel animal agriculture , we should take this drought as an opportunity and become vegans and vegetarians . It takes 16 pounds of grain and 2500 liter of water to produce one pound of edible meat which is a highly inefficient method to feed the country !

[mtknauer]

There is no arguing with you animal welfare extremists. If you want to be a vegan I say go ahead. Just don't push your ideas on me. I am going to stay healthy eating a balanced diet. However, I do not want to pay for your health care costs when you become sick from a diet deficient in certain amino acids and other essential nutrients.

[karek40]

It takes 8 barrels of fuel to produce 7 barrels of ethanol, hardly renewable. It does create more demand for corn an the corn grower makes more when his corn makes. Natural gas is the way to go.

[nehicks]

There are so many OTHER vegetable matters that can be turned into ethanol, cheaper than using corn. It is a perfect show of how stupid our government can be in using a food stuff instead of weeds or even algae to produce this.

[democracy8]

Very true.

[Ulgnud]

Of course the grain prices are climbing. They use the corn to make ethanol and cut our gasoline with it. We have to be the dumbest generation ever. Providence provides us with abundant fuel reserves and we permit our government to put our food into the fuel tank. Granted it is a large inconvenience for us. There are people all over the planet who would love to purchase the corn at reasonable prices who will starve because of the environmentalists nonsense.

[Redrobin2012]

While the drought in the corn belt is is difficult and heart-breaking, livestock producers have the opportunity to pre-buy via contracts, the feed needed for a season. Grain farmers must also protect their income via purchasing adequate crop insurance. No one industry should be singled out as to the solution to a drought. Cattle ranchers in South Dakota have been liquidating cattle herds due to the drought. Bad weather and storms are a way of life for farmers and we need to take responsibility to prepare our enterprizeees for adverse market conditions.

[Nicholas_R]

Farmers usually don't have extra money lying around to pre-buy anything for just-in-case scenarios. But you are probably a rich Republican. Burning food for fuel is stupid. We are much smarter than that. If you were stranded on an island with little food what would you do with your limited supply of food? Think about it.

[Ulgnud]

Nicholas_it, I respectfully doubt that republicans came up with the idea of putting our food in the fuel tank.

[mtknauer]

This is a valid point for large livestock producers to an extent. Large producers should have their feed locked in and marketing locked in through a certain time period. However, you can only lock in prices so far foward. Extended high grain prices will take a toll on the large producers. Smaller producers generally are not large enough to use the futures market to mitigate their risk.

[kbrum1066]

To start with, there should NEVER be a subsidy on ANYTHING. If people want it, then they should grow it, pay for it, whatever. All a subsidy does is create a false "bubble" that really does not exist and that results in artificially higher prices when they should not be high to start with.
Secondly, anyone that believes that using food to create fuel is simply crazy. This simply creates an artificial market (mandated by the government who represents specific self-interests) that artificially raises the price.
Third of all, the use of ethanol has not really shown any real benefit. While it is somewhat cheaper by the gallon, it really is not when you consider all of the outside expenses associated with it or the fact that it takes more gallons to achieve the same mileage as gasoline. In addition, it burns hotter (and eventually damages the engine when used in higher ratios which reduces the benefits even more still. This is yet another attempt to force something onto people, many of whom neither know any better nor care.
If this is such a "great" idea, then why does it have to be legislated? If it is really as good as some people claim, there would be no need to force people into buying it... everyone would willingly buy it and the market would move in that direction.
As far as prices go, farming has always been subject to the whims of nature... and the prices at the market used to reflect that. The problem is that there are few independent farmers out there. Most are tied into unyielding contracts with major corporations that only care about their own bottom line and they are screwed royally when these things happen. When things like this happen you either have insurance or you get screwed.

[nehicks]

Very well put.

[kayflick16]

90 degrees in Indiana I wish for that kind of temperature we have been over 100 degrees and close to 110 degrees most of the summer. The corn is toast here and the soybeans are heading downhill. We did however have a fairly good wheat harvest. But really go where it is really hot and dry , somewhere where there are giant cracks in the ground like Kansas.