Midwest floodwaters that swallowed crops and sent corn and soybean prices soaring are about to give consumers more grief at the grocery store.
In the latest bout of food inflation, beef, pork, poultry and even eggs, cheese and milk are expected to get more expensive as livestock owners go out of business or are forced to slaughter more cattle, hogs, turkeys and chickens to cope with rocketing costs for corn-based animal feed.
The floods engulfed an estimated 2 million or more acres of corn and soybean fields in Iowa, Indiana, Illinois and other key growing states, sending world grain prices skyward on fears of a substantially smaller corn crop. Experts say the trickle-down effect could be severe later this year, affecting everything from Thanksgiving turkeys to Christmas hams.
Rod Brenneman, president and chief executive of Seaboard Foods, a pork supplier in Shawnee Mission, Kan., that produces 4 million hogs a year, said high corn costs were already forcing producers in his industry to cut back on the number of animals they raise.
“There’s definitely liquidation of livestock happening,” and that will cause meat prices to rise later this year and into 2009, said Brenneman, who is also the vice chairman of the American Meat Institute.
Brenneman’s cost for feeding a single hog has shot up $30 in the past year because of record-high prices for corn and soybeans, the main ingredients in animal feed. Passing that increase on to consumers would tack an extra 15 cents per pound onto a pork chop.
It’s a similar story for U.S. beef producers, who now spend a whopping 60 percent to 70 percent 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.
“This is not sustainable. The cattle industry is going to have to get smaller,” said James Herring, president and chief executive of Amarillo, Texas-based Friona Industries, which buys 20 million bushels of corn each year to feed 550,000 cattle.
In Iowa, the No. 1 U.S. corn grower, floods inundated about 9 percent of corn crops, representing about 1.2 million acres — almost 1.5 percent of the country’s anticipated harvest. In Indiana, another 9 percent of corn and soybean crops were flooded.
Higher feed prices will eventually filter through to the cost of milk, cheese and yogurt, too, because 65 percent to 75 percent of a dairy farmer’s production costs are for feed, said Chris Galen, a spokesman for the National Milk Producers Federation.
Many livestock producers will have little choice but to slaughter more animals and send them to market.
“We’re in survival mode now,” said Paul Hill, chairman of West Liberty Foods, a turkey processor based in West Liberty, Iowa.
If corn were to rise to $10 a bushel, said Richard Lobb, spokesman for the National Chicken Council, recovering costs through higher retail prices might not be possible.
“Can you possibly charge enough for the chicken to recoup that investment?” he asked. “That’s a question no one can answer yet because it’s never been done.”
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Mississippi cresting
LOUISIANA, Mo. — Faithful gathered for church services Sunday in towns hard-hit by flooding along the Mississippi River, and many found comfort in word that the swollen waterway had apparently started to hit its high point.
Dozens of parishioners filled the dry Centenary United Methodist Church in Louisiana, a few blocks from floodwaters that still cover about 15 percent of the town’s neighborhoods. They prayed for aid and gave thanks for the volunteers, National Guard soldiers and prison inmates who helped the community of nearly 4,000 in recent days.
It appeared Sunday the flooding in the town and elsewhere in Missouri and Illinois could soon give way to recovery. The National Weather Service said the Mississippi was cresting Sunday at Canton, Mo., not far from the Iowa state line, through the lock and dam near Saverton, about 100 miles north of St. Louis.
The Associated Press
