Thanksgiving turkey becomes expensive

26-06-2008 | |

Thanksgiving turkeys and Christmas hams could become extremely expensive this year now floods have destroyed an estimated 2 million or more acres (800,000 ha) of corn and soybean fields in Iowa, Indiana, Illinois and other key growing states, sending world grain prices skyhigh on fears of a substantially smaller corn crop.

“We’re in
survival mode now,” said Paul Hill, chairman of West Liberty Foods, a turkey
processor based in West Liberty, Iowa. He estimated US turkey
producers will reduce their flocks by 10 to 15% nationwide, a cutback that will
send consumer prices dramatically higher.

Due to the high
feed prices pig farmers have to cut back on the number of animals that they
raise.
“The cost of Thanksgiving and Christmas turkeys
will go up this year, and maybe even more next year,” said Hill, who is also the
chairman of the National Turkey Federation.

If corn were to
rise to $10 a bushel, Richard Lobb, spokesman for the National Chicken Council,
said recouping costs through higher retail prices may not be possible. 

“Can you possibly charge enough for the chicken
to recoup that investment?” he said. “That’s a question no one can answer yet
because it’s never been done.” 
Rod Brenneman,
president and chief executive of Seaboard Foods, a pork supplier in Sawnee Mission, Kansas, that produces 4 million pigs a year,
said this will cause meat prices to rise later this year and into 2009.

Pig feed
costs up $30
Brenneman’s cost for feeding a
single pig has shot up $30 in the past year because of record-high prices for
corn and soybeans, the main ingredients in US pig
diets.
Passing that increase on to consumers would tack
an extra 33 cents per kg onto a pork chop.
In the beef
sector it is the same story. US beef producers now spend 60-70% 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.

Before the floods, corn farmers were
enjoying record profits selling the grain to feed animals and for use in cereals
and as a sweetener in soda and candy. But a sharply smaller corn crop could wipe
out those gains.

In Iowa, the No. 1 US corn
grower, floods inundated about 9% of corn crops, representing about 1.2 million
acres (485,000 ha)  — almost 1.5% of
the country’s anticipated harvest.
In Indiana, another 9% of
corn and soybean crops were flooded, potentially costing farmers up to $840
million in lost earnings, according to Indiana Agriculture.

Floodwaters also tossed farm equipment, sprayed cornfields with
debris and silt and sucked away large chunks of topsoil. For livestock owners
and meat producers, the damage may be felt long after the corn grows
back.

Dairy prices will rise
Higher feed
prices will eventually filter through to the cost of dairy products too, since
65 to 75% of a dairy farmers’ production costs are for feed.

With the cost of
animal feed only going higher, many poultry and dairy farmers are starting to
look for cheaper alternatives.
Farmers buy some of the
byproducts of cereal or flour production, but they’re not nearly as productive
compared to corn.

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