August 27, 2012

A FOLLOWUP ON FOOD PRICES, from Insta-Reader Deb Call:

I just wanted to weigh in on the food inflation issue with a local data point. I live in Southern Iowa and have a small flock of sheep (12) that I use for weed control in my vineyard. I feed grass/alfalfa hay in the winter months (roughly early November through mid-March), and typically start planning in early summer, for how much hay I’m going to need to have on hand to get the sheep through the winter. I have a hay field that my neighbor cuts and bales for me, and we split the hay (he has the big equipment needed for this job) so I don’t have to go searching for hay, fortunately. Anyway, I was chatting with him the other day and we were discussing the impact of the drought and the small hay yield compared to last year. Last year, I had roughly 36 big round bales (about 1400 lbs each), and solely due to the lack of rain this year, the yield this summer was only 18 bales. That’s a pretty drastic drop and pretty standard for this area under the current conditions. People are scrambling everywhere to get hay lined up for this winter, and not just cattle operators. Craigslist is loaded with horses for sale at fire sale prices because people are having trouble lining up enough hay for this winter, at a price they can afford.

Many farmers in this area are chopping their almost-dead cornfields right now and baling it for winter cattle feed, instead of waiting to harvest it because the ears have not filled with kernels, but the stalks are still useful to feed their cattle. I asked my neighbor what he was doing about the hay issue, and he said he was downsizing his cow herd (sending some of his breeding cows to auction) and a lot of people he knows are doing the same because between the scarcity/cost of hay, and the cost of feeding grain through the winter, he wouldn’t break even. This is an ongoing issue in this area because more and more pasture ground is being planted in corn; even marginal cropland that previously would have been used for grazing cattle. The lower yield of this marginal cropland previously would not have produced enough bushels to justify the per-acre cost of the inputs (fertilizer, fuel, fungicides, herbicides, pesticides, etc), but with corn at $8+ a bushel and soybeans over $17, it’s tempting for farmers to put even marginal ground into production, leaving a lot less ground for grazing. That does not bode well for long-term beef prices, particularly if a lot of cattle are dumped on the market before the end of this year. In spite of the news coverage lately, I’m not sure most people have any idea how widespread the crop losses due to this drought are going to be out here, or the wide range of food items that will be impacted by it.

I’m not happy.

UPDATE: Reader Robin Tilling writes:

I just wanted to second Deb Call’s comments on food prices. I too have a small flock of sheep in upstate NY, which I use for the fleeces (I spin and knit) and meat for my family. I have a hay delivery coming this morning and my provider told me to be prepared for the huge increase in price this year. Upstate NY has also been saddled with a very dry summer, bringing production down significantly, and many farmers are shipping what they have out west as they can command a higher price.

It’s going to be a terrible year for anyone with livestock. I was lucky enough to sell off 60% of my flock at the beginning of the summer, so we’ll be okay, but I am getting emails from the woman I bought my flock from desperate to unload some sheep before winter.

I plan on stocking my freezer this fall in hopes that it will get us through much of next year, otherwise it’s beans for us!

Good luck! But I’d prepare for the worst.