US livestock and poultry producers have warned the severe drought in the country will have a “devastating” effect on the agricultural industry, food manufacturers and consumers.
Drought conditions have continued to move across around two-thirds of the US where extreme weather conditions have caused corn prices to spike. The US Department of Agriculture has warned the drought will reduce corn yields this year, prompting fears of a spike in prices of the commodity and pressure on feed costs.
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“One of the detrimental effects of the serious drought conditions across nearly two thirds of the country is the fact some analysts are predicting US corn crop this fall will be at least one third smaller than USDA’s first forecast, causing a 60% spike in corn prices since June,” said Michael Welch, president and CEO of Harrison Poultry and past National Chicken Council chairman.
“This means literally tens of billions in increased costs for livestock and poultry producers and food manufacturers. A very short corn crop will undoubtedly prove to be devastating to the animal, agricultural industry, food manufacturers, foodservice providers and consumers, not just in the US but the entire world. Thousands of jobs and the livelihood of businesses are at risk.”
Hot weather has hit corn and soybean yields in parts of the US. The USDA has warned the reduce yields could lead to retail prices for some foods increasing in the coming months and into next year.
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Half-way through the 2012 crop year almost 40% of agricultural land is experiencing severe drought. Forty per cent of corn and soybean production is in these areas and, in recent weeks, the prices of these commodities have soared. The USDA has said 44% of the country’s cattle production is in areas of severe drought.
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By GlobalDataJohn Burkel, vice chairman of the National Turkey Federation said the drought is likely to affect how consumers purchase meat.
“Long-term, we are going to see the consumer purchasing less meat. They are not going to put the extra bird in the freezer,” he said.
As processors face soaring feed costs, the US meat industry has called for an easing of renewable fuel regulations to reduce the amount of corn ethanol in the country produced this year.
Meat and poultry companies have said a waiver of the Renewable Fuels Standard is the only option to help the industry deal with the knock-on effects of the country’s drought.
JD Alexander, president of the National Cattlemen’s Beef Association (NCBA), believes the solution is “not rocket science”.
“I just want to be clear where I stand and where NBCA stands. I also want to be clear where we do not stand. We do not stand for federal mandates picking winners and losers, we do not stand for manipulation of corn prices, we do not stand for a federal government standing by patiently forking over taxpayer dollars to artificially inflate the price of corn for livestock producers and other end users. 70% of cattle country is under drought conditions. Let the market work [with] free market principles and implement the waiver.”
