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November 2, 2012

Drought, hay shortage mean higher prices on meat next year

> SOUTHERN INDIANA —  Mike Myers knows he’s one of the lucky ones.

Owner of M&M Cattle Company in Utica, Myers is one of the few livestock farmers in Southern Indiana who isn’t going to have to find a new source of feed for his livestock this winter. Myers buys and sells hay, and he bought some in the spring with the intent of re-selling it. Now, that won’t be necessary.

“I was just lucky, you know what I mean?” Myers said. “I’m going to lose the profit of selling the hay, because I was planning on selling it, but I am going to have enough to take care of my livestock.”

Others won’t be so lucky. Because of the drought that took place over much of the summer, there were fewer cuts of alfalfa, said David Hynes, Clark County Purdue Extension educator.

“I think typically, we get five cuttings of alfalfa,” Hynes said. “Guys were saying they got three, maybe four. As far as the grasses go, any summer grasses were hit pretty hard, but the cool-season grasses shouldn’t be too bad, I don’t think.

“I haven’t heard anybody complaining about grass shortages. It’s been mostly alfalfa that’s short.”

Typically, Marysville-based hay seller Jeff Bayes gets $5 per bale of alfalfa. But then again, typically his barn is full at this time of year and he has enough to get through a season.

“Of course, we’re short,” Bayes said. “We’re going to run out.”

These days, Bayes is charging his repeat customers the regular price, but new customers are being asked $8 per bale.

“I’ve had some people walk away. There are some people that won’t give that,” Bayes said. “But I’m going to run out, so I had to slow things down. That’s the only way I could see to slow it down and not let them clean me out.”

There are strong indications that the drought-related shortage is going to send ripples throughout the industry. September cattle placements onto feedlots dropped 19 percent compared to September of 2011, according to a study by the U.S. Department of Agriculture. Furthermore, the USDA lists 54 percent of the nation’s pastures in “poor” or “very poor” condition.

“Farmers will have to find some alternate ways to feed their animals,” Hynes said. “If they have cows with calves, they’re going to have to figure out how to maybe early wean some of the calves so that the cows won’t eat as much. They may have to sell off some animals [for early slaughter]. 

Alternative feeds are made from corn and soybeans, both of which also had short harvests this year. High feed costs have caused feedlot managers to lose up to an estimated $200 per head, according to a Kansas State University study.

“As a result of the slowing placements in the past three months, the number of cattle on feed dropped to 3 percent below year-ago levels on Oct. 1,” said Chris Hurt, Purdue Extension agricultural economist. “Cattle on feed will play a role in rationing the nation’s short corn supply.”

The end result won’t put smiles on many faces in the checkout lanes of local grocery stores. A 4-percent drop in the national beef-cow herd will mean higher prices for consumers, according to a Purdue University release.

Feed prices will need to drop off before the country’s cattle numbers recover, Hurt said.

“That moderation in feed prices could begin in a small way with lower soybean meal prices in the spring of 2013, assuming reasonable South American soybean production,” Hurt said. “Further declines in feed costs could occur with a better grazing season in the spring and summer of 2013 and a return to larger U.S. corn and soybean crops next year.”

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