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Are High Grain Prices Good for Anyone?

Submitted by on October 2, 2012 – 1:25 pmNo Comment

by Roy Roberson (Southeast Farm Press)  • Sounds like a good deal for grain growers and a bad one for livestock producers and consumers, but are such high prices really good for any of us?

• Allan Baucom says the last thing any reasonable grain farmer would want to do is to put a livestock producer out of business. “They are our customers, our neighbors, our friends, and historically our most reliable partners in agriculture.”

Some well regarded economists contend $20 a bushel soybeans and $10 a bushel corn and wheat are not only possible, but likely for this year and beyond.

Sounds like a good deal for grain growers and a bad one for livestock producers and consumers, but are such high prices really good for any of us?

…While the unexpected $3 a bushel boost in corn prices may put a little extra jingle in the pockets of grain growers, it will conversely take at least an equal amount of money out of the pocket of livestock producers, especially poultry producers in the Southeast.

…So, the long-debated fuel versus food debate adds a third corner to the economics triangle: food versus feed versus fuel.

Though cotton growers don’t have a proverbial dog in this fight — right now — the continued loss of cotton acreage to grain, primarily due to the run-up on prices — could easily add yet another F to the fray with fiber.

…“Ultimately agriculture, as a whole industry, is in this current predicament together. The different segments of the industry have to learn to work together better, rather than make political moves that may provide a temporary benefit to one segment, but a long-term detriment to the whole industry, the North Carolina grower adds.

…Charles Hall, executive director of the North Carolina Soybean Growers Associations says, “I noticed that Gov. Perdue specifically mentioned soybeans and biodiesel. I thought EPA was seeking comments on corn ethanol, so I was a little surprised to see soybeans included in the governor’s request to wave the RFS volume “in whole” and not just the ethanol portion.

…Though there is some level of agreement among all parties involved that ethanol from corn is not the ideal source of renewable energy, corn growers have been quick to step up production to meet their part of the mandate.

The same congressional act calls for a higher percentage of fuel to come from cellulosic sources.

…“Actually in the short-run, we could see meat prices decline or at least stabilize due to the drought forcing herd liquidations and thus inducing higher short-term meat supplies,” he adds.

As livestock inventories shrink, future meat supplies will be lower, pushing meat prices higher this winter and in early 2013.

The USDA is projecting meat prices to increase 3.5-4.5 percent and food prices overall to increase by 2.5-3.5 percent in 2012. Most consumers would likely be surprised to know that is only a 1 percent greater increase than has occurred over the past decade or so.  READ MORE and MORE (New Hope 360)


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