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Feed costs top 70 percent for livestock, poultry farms
 
By STEVE BINDER
Illinois Correspondent

ARLINGTON, Va. — A new report released July 17 by the country’s largest feed organization concludes that upwards of 70 percent of the costs of raising cattle and poultry is due to feed.
The report, titled Future Patterns of U.S. Feed Grains, Biofuels, and Livestock and Poultry Feeding, also concludes feed supplies should be sufficient in the decades ahead, even with the nation’s growing requirement for corn-based ethanol.

The report was commissioned by the American Feed Industry Assoc. (AFIA) and the Council on Food, Agricultural and Resource Economics (C-FARE). “The U.S. livestock and poultry industries are working under significantly different dynamics than they were just five or 10 years ago,” said Joel G. Newman, AFIA president and CEO.  “This changing environment will not slow up in the coming years.”

Notwithstanding this year’s drought conditions, feed availability in the next 3-7 years should improve, the report stated. Robert Wisner, a former economics professor at Iowa State University, was the principal investigator for the study. He noted the drought will dent grain supplies now, but likely will not have any long-term impact.

He said such weather conditions have been cyclical, with extreme drought conditions in the 1880s, 1930s, mid-1950s and for short periods in the early 1970s and late 1980s. “My view is, this is a temporary situation,” Wisner said.

The report also concludes that livestock and poultry industries keep an eye on China’s demand for not only corn and soybeans, but also for meat, milk and eggs; the development of biobutanol; and potential growth in production of de-oiled distillers grains.
“U.S. agriculture is the envy of the world,” Newman said. “We are the technology leaders and need to continue to be. This is the key to success of feeding the growing population by 2050 – the use of and acceptance of technology to feed more people using fewer natural resources.”

He noted that while the United States’ cropland space is at its maximum, countries such as Brazil and Argentina have a lot of room to grow their ag industries.

While the report does not evaluate the pros and cons of biofuel, it nonetheless identifies it as a key driver affecting feed costs. “U.S. government expenditures for U.S. ethanol production subsidies of approximately $5.1 billion in 2009 partially offset the average benefits from lower gasoline prices,” the report stated.
“In addition, ethanol policies that contributed to higher corn prices reduced farm program expenditures. Higher corn prices, however, have increased costs to the feed-livestock sector and have contributed to higher food costs.

“U.S. corn use for ethanol production increased by 4.42 billion bushels, or 623 percent, from the 2000-01 to 2010-11 corn marketing years. At the same time, total use of U.S. corn for feed declined by about 1.27 billion bushels.

“We estimate that approximately 55 percent of this decline was offset by increased feeding of distillers’ grain and solubles, the major byproduct or co-product of the ethanol industry. Other non-ethanol and non-feed uses plus exports declined by 182 million bushels,” it added.

To read the report, go to www.afia.org
7/25/2012