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.

  • Dean Reynolds

    Dean Reynolds is a CBS News National Correspondent based in Chicago.

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