Friday, September 21, 2012

You'll Feel the Effects of the Drought at the Deli (But Not Quite Yet)

Posted By on Fri, Sep 21, 2012 at 7:50 AM

This guy's gonna be more expensive next year - IMAGE VIA
  • Image via
  • This guy's gonna be more expensive next year
This summer's drought -- one of the worst in Missouri history -- hurt corn farmers in the bi-state area, no doubt.

But industry experts are telling Daily RFT that across the board, the big losers in this uber-dry weather are actually livestock producers.

"The pictures you see on television are farmers with bad crops," says Pat Westhoff, director of the Food and Agricultural Policy Research Institute at Mizzou. "But the person you don't see is the farmer trying to produce beef or pork or chicken. And ultimately [the drought] is going to mean higher prices for consumers."

When a drought cripples a corn crop, Westhoff says, the resulting scarcity makes prices climb. So the farmers who managed to grow something will actually feel pretty happy about selling at those higher prices. (That's how they feel in Minnesota, for example.)

Meanwhile, Missouri growers that had to totally plow under will cushion the blow by filing for crop insurance relief. Last year, American farmers set a record for doing this, to the collective tune of $8.1 billion. This year, Westhoff says, Missouri will get a bigger share of that total "because we had some of the worst losses in the country."

Eat as many of these as you can. RIGHT NOW. - IMAGE VIA
  • Image via
  • Eat as many of these as you can. RIGHT NOW.
But then there's the livestock producers.

"Almost all of them are making less money this year," Westhoff says.

That's because they already own the animals, need to feed them, and don't have any other option than to fork over more cash for expensive corn (and soybean, too).

"You're at the mercy of the marketplace," says Don Nikodim, executive director of the Missouri Pork Association. Almost two-thirds of a pork farmer'S costs go toward buying feed, he says.

"It's particularly bad [for us] right now because you have that feed cost, then at same time, there's a lot of meat in the marketplace right now, so we get low prices for animals we take to market."

What does it all mean for you carnivores? Higher prices, according to Nikodim -- but not just yet.

Livestock producers are scaling back, so in about 12 months, he says, "you'll start seeing fewer calves and pigs available. So there will be less meat, which means typically higher prices."

"The real telling time will be a year out. Consumers won't feel this for a while."

The message: Eat all the hot dogs you can possibly eat for the next twelve months. DO IT.

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