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Costlier feed, costlier pork
Soaring corn prices hit Pennsylvania hog, dairy, poultry farmers
Sunday, May 18, 2008
Hog farmer Dave Reinecker's 100-pound piglets in York Springs, Pa.

YORK SPRINGS, Pa. -- Dave Reinecker switches on an auger, and dozens of hogs barrel toward stainless steel feeders through which bits of corn kernels and soy meal begin to stream. A year ago, he was paying less than $3 a bushel for that feed, but now the cost is $6.40 and rising so fast that he, like thousands of other livestock farmers nationwide, are thinning their herds at a loss.

"Farmers can't afford to feed expensive corn to sows because corn prices are crazy," said Mr. Reinecker, a sixth-generation farmer in Adams County.

It takes about $153 worth of feed to raise an animal from a piglet to a hog that will fetch only $110 at market, he said. A year ago, the same amount of feed cost roughly $77.

Cattle and poultry farmers are facing similar struggles, which are expected to result in a smaller supply and, eventually, much higher prices for consumers at a time when food costs already are up 5 percent from a year ago.

There's more to come, said Ephraim Leibtag, an economist with the research arm of the U.S. Department of Agriculture. "As farmers start to liquidate, supplies will start to diminish, and meat is one of those categories that are going to increase in price."

Some blame the spike on governmental mandates encouraging ethanol production, which has increased demand for corn and has decreased the acreage available for wheat, soybeans and other crops. The movement toward biofuel has tied energy demands to food like never before, but it isn't the only factor.

The value of the dollar is down and the national credit crunch makes it harder for farmers to find financing to get through weather-related downturns. Meanwhile, Australian grain production is down because of drought, and there is more demand for feed exports to China and India, which are shifting to more protein-based diets as economic conditions there improve.

"It's not just ethanol causing the problem. It's the whole world energy situation and the tightness of the supply of grain and feed throughout the world," said Bryan Black, president of the National Pork Producers Council. Already, the price of grain- and soy-based products, such as cereals, pastas, nut butters and cooking oils have increased. Meats are going to be next, farmers and economists say.

State particularly susceptible

Pennsylvania's economy could be especially susceptible to changes in the agricultural economy because dairy, cattle and chicken products are among the state's top agricultural commodities, according to the USDA.

"Consumers better hold onto their hats. If you see sales on pork, you better put some in the freezer because the price is on its way up," said Herb Schick, a Kutztown, Berks County, hog farmer and president of the Pennsylvania Pork Producers Council.

A quarter of all corn grown in the United States last year went to making enough ethanol to replace just 2 percent of gasoline used in the country, said Bill Freese, a science policy analyst for the Center for Food Safety in Washington, D.C.

"We need to rethink biofuels. At best they should play only a small role in our efforts to reduce dependence on oil," he said. "We should care more about rising food prices instead of continuing down this path of promoting ethanol."

Not surprisingly, the National Corn Growers Association says that analysts like Mr. Freese are misguided.

"They assume we're displacing sweet corn used for food. They don't understand we can increase our [per-acre] yield. They don't understand the potential to increase our production over time," said association president Ron Litterer of northern Iowa.

Last year he planted one-third fewer soybean plants to make room for more lucrative corn crops. The changing economy is good for corn farming, even if it means struggles in other agricultural sectors, said Mr. Litterer, who also raises hogs.

"We've been living with $2-a-bushel corn for a long time, and it's good that now we're getting our income from the ethanol industry," he said. "It has not been profitable [for hog farmers] but prices are going up and it's going to get to a break-even point."

The price of crude oil is the real driving force behind increasing food prices, he said.

Without ethanol, gasoline costs would be even higher, and that would translate into even higher grocery bills, said Mr. Litterer. It takes energy to plant, harvest, manufacture, pack, transport and store perishables, he said.

Consumers should be wary, said Terra Wellington, author of the book "The Mom's Guide to Growing Your Family Green," which comes out in 2009. Growing too much corn for energy use could put the nation's economy at risk, she said. While it might help decrease dependence on foreign oil, it could increase reliance on foreign food sources, she said.

Mr. Litterer said that's an exaggeration.

"The U.S. agricultural industry is still going to be able to produce enough food to meet our domestic needs," he said. "This isn't a crisis."

Energy security, food security

Still, it's dangerous to base so much of the country's consumption on one crop, said Curt Ellis, a food and society policy fellow with the Thomas Jefferson Agricultural Institute in Columbia, Miss., and co-producer of the recently aired PBS documentary "King Corn."

"We're really put all our eggs in one basket. Think about going to a drive-through. The hamburger you're eating has been corn fed, the soda you're drinking has been sweetened with corn syrup, the french fries you're eating are fried in corn oil, the boxes are corn-based plastic packaging and the SUV you're in is running on corn-based ethanol," said Mr. Ellis.

Tom Kennedy, director of the food and agribusiness master's program at Delaware Valley College, urges a broad-based approach to the production of biofuels using a wider variety of ingredients such as cellulose, switchgrass and waste from timber harvests.

"It will reduce the high cost of corn, and will lead to a more balanced approach to the pricing of corn as a food ingredient," he said. Corn is a vital part of the food supply chain that is used, not only for direct human consumption, but to feed livestock, he said. Over reliance on corn in fuel production translates into higher prices for meat, eggs and dairy, he said.

That concerns the American Meat Institute, which represents packers and processors. "You probably have some very happy corn farmers out there, but it's a problem when food is being valued more for its energy content than its nutritional value," said Jesse Sevcik, the institute's vice president of legislative affairs. "We have to find a way to balance the needs of energy security with food security," Mr. Sevcik said.

Some farmers already have gone out of business. Mr. Reinecker won't consider that, no matter how hard times get. "That would be like defeat, very depressing," he said. "This is not only my job, but it's my life. ... It's sort of like going into the ministry; you do it because you get a calling. For me to turn this operation off now would be pretty traumatic."

Tracie Mauriello can be reached at tmauriello@post-gazette.com or 717-787-2141.
First published on May 18, 2008 at 12:00 am
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