Check the numbers -- Corn prices are affecting the beef industry
FORBES, N.D. -- Danny Herron is wrong on both counts of his comments about beef in his interview in the June 9 edition of Agweek. First, fed cattle prices presently are at $95 per hundredweight. The highest average price on record was $92.73 in 2...
FORBES, N.D. -- Danny Herron is wrong on both counts of his comments about beef in his interview in the June 9 edition of Agweek. First, fed cattle prices presently are at $95 per hundredweight. The highest average price on record was $92.73 in 2007 and the average for 2006 was $86.08. 2008 prices will set a record but, unfortunately, will fall far short of enough to erase large losses caused by corn prices. Therefore, Herron is totally wrong in his assertion that cattle prices are lower than two years ago.
Herron also says that there is only 19 cents of corn in a $6-per-pound beef steak. Of course, a steer is not all steak and the average price of all cuts of choice beef at retail is a little more than $4 per pound. There is, in fact, 8 pounds of corn in each pound of retail beef and pork and about half that in each pound of poultry. Cattle are half as efficient in grain conversion as hogs, but nearly all the feed of hogs is grain while only half the lifetime feed consumption of a fed steer is grain. (Fourty-five percent of the live weight of a choice steer ends up as retail weight beef, but it accounts for 90 percent of the steer's total value.)
At $7 per bushel for corn or $12.5 per pound, there is $1's value of corn in each retail pound of beef or nearly 25 percent of the total price. Of course, only about 40 cents of this dollar currently is being recovered by cattle feeders whose losses remain at above $100 per head.
The ethanol industry, with its subsidies, may make money with $6 corn, but the livestock industry cannot. Heavy losses will continue until production is reduced enough to increase retail price of beef by about 60 cents per pound. Increased ethanol production from corn means less meat and higher livestock product prices.
Congress must eliminate all ethanol subsidies for plants that are planned but not yet under construction or the situation will get much worse. Does our congressional delegation really want to be responsible for the destruction of the livestock industry? Without ethanol, corn would be at around $3.75 per bushel, which would be workable for everyone. With less corn acreage, fertilizer prices would be less.
Editor's Note: Moore farms in Forbes, N.D.