By Don Nelson
ATHENS BANNER-HERALD
18/02/2007
Ethanol's promise of cheaper fuel and less dependency on foreign oil has political leaders pushing for more production of the alternative energy source, but livestock owners have a big beef with the corn-dependent fuel.
Ethanol, or grain alcohol, is produced domestically from crops such as corn and combined with unleaded gasoline to make a cheaper and cleaner fuel blend.
The demand for corn by ethanol refineries, however, has eaten into the supply of grain feed available for livestock, driving up the cost of corn to more than $4 a bushel, nearly double the price paid last year, say farmers in Northeast Georgia.
That, in turn, has cut into the bottom line of cattle sales.
University of Georgia agribusiness experts will discuss, among other topics, the extremely high grain prices and their effect on Georgia's farming industries during a series of agricultural economic forecasts starting Monday.
"As cattle producers, we're at the mercy of what happens with corn," said Glenn Farrar, president of the Clarke-Oconee Cattlemen's Association and owner of the Vet at Blue Ridge.
The growth in ethanol production during 2006 had ethanol refiners consuming up to 20 percent of the U.S. corn crop, according to a Feb. 13 article in U.S. News and World Report.
The dwindling supply and higher cost of corn means Midwestern feed lot owners who fatten up cows on corn before selling them to meat processors are paying less to the farmers who raise the cattle and other livestock. Meat packers set the price that consumers pay at the grocery store.
"Most people outside of agriculture don't realize farmers are about the only people who don't set the price of their commodity," said Russ Page, an Oconee County cattle breeder. "Unless you sell purebred cattle like me, if you have 100 cows and sell 80 or 90 calves, your bottom line depends on what the feed lots pay you."
Wayne Peters, a cattle farmer in Monroe, said fat cows, the 1,200-pound to 1,300-pound steers and heifers from which steaks are cut, are losing at least $100 an animal.
"The fat cows cost like the dickens to feed in the West," Peters said. "It's also costing more to raise and feed them (here), but they are bringing less at auction."
"From last August and September, the price of calves probably dropped 30 cents a pound," said Todd Stephens, who manages Northeast Georgia Livestock Auction on Winterville Road in Athens.
The auction barn sells sheep, goats and cattle for area farmers. Stephens, who also raises about 100 head of beef cattle and some chickens, said a 500-pound calf formerly sold for $1.25 a pound, but these days is bringing only about 95 cents a pound, a $150 difference on the calf.
As they get less for their animals, farmers continue paying more to feed them. Oconee cattle breeder Page said the price of a 50-pound bag of partial corn feed mix recently jumped $2 in a matter of weeks.
Whether you are raising cattle for breeding or sale at the auction, corn is important to beef production, Page said.
"If you don't feed them some grain, the cattle don't grow as fast and reach reproductive age as fast," he said. "It hurts the bottom line."
The corn factor also hurts dairy farmers, said Farrah Newberry, the Georgia Milk Producer's executive director who lives in Watkinsville. Dairy farmers use more corn than hay in cattle feed, Newberry said, and farmers usually benefit from the traditional seasonal decline in corn prices in the fall.
But grain prices remained high throughout last year, and when corn goes up, every other feed additive does as well, Newberry said. Those higher prices, plus more expensive energy costs, hurt even more because dairy farmers were paid the lowest milk prices in 30 years, Newberry said.
"We are definitely worried about ethanol's impact, but also worried about losing our local industry and food supply, not just in Georgia but across the country," Newberry said.
Since 1996, Georgia has lost 41 percent of its dairies, Newberry said. In Northeast Georgia, dairy farms continue production in Morgan, Hart and Elbert counties. Oconee County hosts one dairy farm, and the University of Georgia maintains a dairy farm in Clarke County.
On top of the corn shortage, last year's drought and an assault of army worms decimated hay production in Northeast Georgia, putting even more pressure on livestock farmers.
"If you didn't have enough hay, and you're trying to buy it now, it's about a third more than this time last year," Stephens said. "Usually you can buy a roll ( of hay) for $30; now it's $50.
The inflated hay prices and the impact of last year's drought on hay production at LFH Farm in Winterville forced Frank and Jeanne Hist to sell off the last of their cows Wednesday at the Northeast Georgia Livestock Auction.
Frank Hist, who had been cattle farming since 1980, said he was able to produce only a little more than half of his expected hay crop last year, and when it became apparent he could not feed his herd this winter, he had to sell.
Auctioning the animals, some of which he had owned long enough for the cattle to respond to Hist calling their name or number, was a sad experience for the couple.
"It was kind of rough," Hist said. "They were my life, and every morning I would be out there with them; most had a name or a number and there wasn't a cow I couldn't put my hand on."
He even owned had a 2,085-pound bull so gentle Hist could ride him.
Hist took solace in selling his remaining cattle for a good price and in knowing that most went to farmers who would take good care of them.
"It made me proud with the money they brought as well as the people who bought them; they all went to good homes," Hist said.
Hist said he might return to the cattle business in six months if prices settle back down.
Even if farmers were able to dodge the drought's impact, last year's plague of army worms ravaged entire fields of hay.
"At the end of the last (fall) growing season, a lot of our farmers were hit with army worms," Page said.
Page described the army worm scourge as a swarm of caterpillars that begin on one side of field and work their way to the other side, consuming all nutritional value in the grass.
"There are billions of them," Page said. "When you walk through the field, every square foot has hundreds of them, and you can see them and hear them dropping to the ground."
The worms devoured fields before farmers could gather their last hay harvest, so many farmers fell short in their hay supply this winter, Page said.
"Going through the winter season, the cows starve and can't produce milk," he said. "Cows eat hay everyday, and it's expensive just to keep them alive, much less thrive."
Page said each of his cows eats a third of a bale of hay a day, and at $6 to $6.60 a bale - up from $3 last year - hay costs mount quickly on a large herd. Page also said if a cow is not kept fed and contented, it won't produce milk for her calf.
"Every cattle man, whether dairy or beef, needs to keep the nutritional level of the feed product up to produce calves," Page said.
Healthy cows reproduce one calf about every 12 months, and without the calves, the cattle farmer won't have product to sell year after year.
Farrar said that cattle production often moves in cycles, and that the number of cattle might decrease over time in the near future.
"It's a cycle," Farrar said. "About every 10 years the number of cattle drops."
Farrar said one of the main concerns the cattle industry faces now is maintaining the quality of beef if the corn supply remains low. He said the Georgia Cattlemen's Association is researching sources of other feeds such as different types of hay and byproducts from other industries. He mentioned cotton seed hulls and mash from whiskey distilleries.
Page also said byproducts could provide a good alternative to corn feed and said farmers should look to the industries close by. Page said apple cider processors and even ethanol refineries offer byproducts that might serve as cattle feed for those farmers who operate near them.
