By DOUG SCHMITZ
Iowa Correspondent

LE MARS, Iowa — Of the many concerns U.S. livestock producers may carry into harvest, Le Mars hog producer Bill Tentinger says soybean meal is the biggest feed cost issue right now – although producers are getting some relief in the futures market.

“Now, the basis is not adjusting with the futures,” said Tentinger, who’s also Iowa Pork Producers Assoc. (IPPA) vice president of operations. “The crushers are telling us there is a shortage of meal until the new crop of beans comes to market. I have heard one market analyst say there are not enough new crop beans forward sold to solve the shortage either.”

While 2009 feed costs have come down from where they were last year, Nevada hog producer Dave Moody says they are still much higher than he and his fellow producers have traditionally seen them – to the tune of 30 to 40 percent higher.

“One of the problems with continued higher costs is that the price livestock producers are receiving for their product has not yet shifted to a new high level as the inputs have,” said Moody, IPPA immediate past-president. “For the pork producer, we have seen a decline in price due to many compounding reasons.”

One of those reasons, Moody said, has been using the misnomer of the “swine flu,” that the media helped instigate, which may have inadvertently instilled a fear of eating pork. “H1N1 being called “swine flu” and all the negatives that have gone along with it,” he said. “We are now dealing with supplies greater than demand.”
But Dan Morrical, Iowa State University (ISU) sheep extension specialist, said current feed costs are actually lower than in 2008, with corn at $3 per bushel. However, he said the biggest change has been in the price of hay, especially dairy quality, which are $30 to $100 per ton lower in 2009.

“This reduced hay price is due to lower demand hay as the livestock industry is shrinking in the face of negative margins,” he said. “All costs of production have increased drastically over the last two to three years; however, the price producers are receiving for the products has not increased in proportion and therefore have resulted in loss of equity.”

With beef cattle, Dan Loy, ISU professor of animal science, said feed costs and feed efficiency are the main drivers of production costs.

“Current easing of corn prices has eased some of the feed cost pressure and hopes of profitability have returned for cattle that can be currently purchased,” he said. “However, this is after a very long protracted period of losses, including in the cattle currently being marketed.”

Despite mixed reactions on feed costs, Morrical said U.S. farmers are finding ways to adjust, which have included fine-tuning their rations to lower cost of gain, as well as reducing feed storage and delivery wastes.

“In order to improve feed conversions, producers are doing more timely marketing of animals as they reach their finished weight,” he said. “Additionally, producers are trying to reduce feed storage and delivery wastes. As an example, many have gone to processing the hay to prevent sorting and reduce waste.”

Morrical added that sheep producers specifically are being more careful with abrupt ration changes, along with ensuring lambs are vaccinated against enteroxemia (overeating) prior to being on full feed of high-concentrate rations.

While there have been some changes in rations, if cost-effective, Moody said one problem with using other ingredients is being able to handle them.

“Our milling systems are set up for a corn/soy ration and don’t have the bin space to add another ingredient or way to use a wet product,” he said.

Distillers grains

On the plus side, Loy said distillers grains continue to be a real opportunity to provide energy, protein and other nutrients at a competitive cost, though it’s not automatic.

“Feeders should consider transportation and storage costs, and their local opportunities,” he said. “We see some adjustment in rations, such as inclusion rates of byproducts, on a periodic basis. Many producers will stay with a single supplier for a group of cattle to maintain consistency.”

Although Ten-tinger said he thinks some producers are using non-traditional feedstuffs to defray input, he’s changed suppliers if he can’t get them to adjust costs.

While the state is fortunate to have distillers grains, which have helped cattle producers, Iowa Agriculture Secretary Bill Northey said in many cases, maximum cost-saving has already been achieved – but with farmers dipping into their equity to pay feed bills.
“Unfortunately, at the end of the day, we need to reduce the supply of animals so that prices will increase to at least breakeven and, hopefully, profitability,” he said.

That’s why Tentinger said most producers he’s talked to are evaluating their feed diets on a weekly, or at least a monthly basis, and tweaking whatever ingredient they can handle.

“Compared to ‘08, costs are lower but so is the hog market,” he said. “The feeling in the country is pure frustration,” he added.
“We are in a bad position out here at no real fault of our own. No one seems to have the answer other than mass liquidation. There is just too much supply at this time.”