Pork producers; Get used to $4 corn
Betsy Freese
As the Iowa Pork Congress kicks off this week in Des Moines, producers have
one four-letter word on their minds: CORN.
With input demand from the exploding ethanol industry doubling corn prices from
a year ago, U.S. pork producers are looking at 60% (and higher) feed costs in
2007. That could mean red ink for an industry that has been profitable for the
past three years.
"Profitability and competitiveness is a critical issue for us this year," said Iowa
pork producer Tim Bierman. Bierman represents Iowa on the National Pork
Board.
As the Iowa Pork Congress kicks off this week in Des Moines, producers have
one four-letter word on their minds: CORN.
With input demand from the exploding ethanol industry doubling corn prices from
a year ago, U.S. pork producers are looking at 60% (and higher) feed costs in
2007. That could mean red ink for an industry that has been profitable for the
past three years.
"Profitability and competitiveness is a critical issue for us this year," said Iowa
pork producer Tim Bierman. Bierman represents Iowa on the National Pork
Board.
"Get used to $4 corn," Dermot Hayes, professor and Pioneer chair of
agribusiness at Iowa State University, told delegates at the Iowa Pork
Producers Association (IPPA) annual meeting on Tuesday. In order to stay
profitable with the new reality of feed costs, the industry needs to shrink by 10%
in pigs farrowed, he said.
"We will have to cut back on production and we need a smaller industry to do
that," Hayes said. "We need lighter hogs and less hogs."
Iowa State models suggest the U.S. livestock industry in total needs to reduce
the amount of corn it uses per year from 6 billion
"We will have to cut back on production and we need a smaller industry to do
that," Hayes said. "We need lighter hogs and less hogs."
Iowa State models suggest the U.S. livestock industry in total needs to reduce
the amount of corn it uses per year from 6 billion bushels to 4 billion to
accommodate the demand from ethanol production, said Hayes. The swine
industry is at a disadvantage to beef and dairy because it cannot feed the byproducts of ethanol plants as efficiently and effectively.
Another concern with the new reality of corn, corn and more corn, said Bill
Northey, Iowa Secretary of Agriculture, is the effect on the environment.
"Will $4 corn mean tearing up land in conservation programs?" Northey said. "We
need to keep our soil on the land and our rivers and streams clean."
Despite all the potential problems ahead for the pork industry due to ethanol
growth, producers in Iowa are still optimistic. For one thing, many of them grow
corn, and a good portion have invested in the renewable fuels industry. A survey
of 607 members of the IPPA found that 20% own shares or stock in an ethanol
plant and another 14% in a biodiesel plant. More than one-third are using
distillers grains in their feed rations.
This support of ethanol was evident in two resolutions brought to the IPPA on
Tuesday. The first, calling for legislation to phase out tax credits for ethanol
plants, failed. Producer Norm Schmidt spoke out against the resolution saying,
"Ethanol is still a fledgling industry. Tax credits are still needed."
A second resolution, stating that the IPPA is not in favor of mandatory allocation
of feedstuffs to the livestock industry, passed. The Delaware County Pork
Producers supported the resolution, saying "ethanol production will help to
reduce our country's dependence on foreign oil."
One Delaware County producer stood and said, "This will be a time of adjustment
for all of us and it will be painful, but it might be a good thing. Let's let the market
work."