What is in this article?:
- The panel’s testimony uniformly painted ethanol - with its government backing and production mandates - as a key cause of livestock/poultry producers’ dipping profits and a coming rise in consumer prices.
Drought, hay, DDGs
Another question posed by Meyer: with ethanol mandates and livestock feed needs, what will happen when the United States faces a year of widespread drought in corn-producing areas?
“We’re living on borrowed time from a sometimes fickle Mother Nature,” said Meyer. “The last major drought in the Midwest occurred in 1988. The national average corn yield that year was 26 percent below the long-term trend. The 1988 shortfall didn’t cause major disruptions in U.S. livestock and poultry operations because farmers and the federal government held huge stocks of corn.”
What would happen now if yields fell 26 percent below trend with a 5.4 percent projected at the end of the coming crop year? In such a scenario, due to improved corn varieties yields are unlikely to fall as much as they did in the 1980s.
Even so, Meyer said if the impact is only half as large “the resulting corn crop would be less than 12 billion bushels in a world that needs 13 or 14 billion. A completely free market would push prices to effectively ration the short supply.” However, pointing again to the RFS, Meyer said today’s “corn market isn’t free … and the brunt of rationing will fall on livestock and poultry producers. But they can’t shut down a production system quickly – animals must be fed or destroyed.”
As for how hay figures into the feed equation, Eric Erba, California Dairies, Inc., Senior Vice President for Administrative Affairs, said “there truly has been an issue of availability of hay. In California, we’ve seen decreases in alfalfa acreage in just the last two years. … Alfalfa represents 10 to 15 percent of the rations fed to dairy cows.
“We’ve heard alarming reports that hay fields are being torn out and being replaced by higher-value crops such as cotton, tomatoes and fruit and almond orchards.”
Erba also played up “a spectacular change in historical trends” as a recent USDA report says that ethanol plants will soon consume more corn than the livestock industry.
In his home state, said Texas Rep. Randy Neugebauer, “we’ve had a huge drought and folks are thinning herds and feed supply is diminished substantially as we go into winter. What about hay availability?”
Meyer: “Hay availability will be an issue. … One friend (in the Southwest) told me last week ‘we’ve already used this winter’s hay supply to get (the herd) through the summer.’ That may be a bit of an overstatement, but not much.”
Hay stocks, predicted Meyer, will “get very tight toward the end of the year. Prices have already gone up dramatically during the summer months.”
Neugebauer also wanted to know how dried distillers grains (DDGs) factor into the feed situation.
“For the turkey industry, it’s fairly low,” said Michael Welch, president of Georgia-based Harrison Poultry, Inc. “We’re using around 5 percent (DDGs). … Corn is 50 percent of the ration and cornmeal is 20 percent.”
Meyer said DDGs are “by far better feed for beef cattle than any other species. … But a lot of cattle aren’t where DDGs are so, in many cases, there are substantial transportation costs.”