Record corn prices mean more expensive meat, dairy

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(Agencies)
Updated: 2008-06-23 09:26

Even before the floods, Tyson Foods was complaining that high grain prices would drive up its costs by $600 million this year. The world's largest poultry company has already raised its prices over the past year, and expects to keep raising them, CEO Dick Bond told analysts at a conference in May.

Higher feed prices will eventually filter through to the cost of milk, cheese and yogurt, too, since 65 to 75 percent of a dairy farmers' production costs are for feed, said Chris Galen, a spokesman for the National Milk Producers Federation.

With the cost of animal feed only going higher, many poultry and dairy farmers are starting to look for cheaper alternatives.

Nebraska dairy farmer Dan Rice, who has 1,500 cows, said one alternative is to buy some of the byproducts of cereal or flour production, but they're not nearly as productive compared to corn.

"If we all feed less corn and get less production, then the price at the grocery stores are going to go up," said Rice, who supplies milk to grocery stores in Omaha and around Kansas City.

Without easy ways to cut costs, many livestock producers will have little choice but to slaughter more animals and send them to market.

"We're in survival mode now," said Paul Hill, chairman of West Liberty Foods, a turkey processor based in West Liberty, Iowa. He estimated US turkey producers will reduce their flocks by 10 to 15 percent nationwide, a cutback that will send consumer prices dramatically higher.

"The cost of Thanksgiving and Christmas turkeys will go up this year, and maybe even more next year," said Hill, who is also the chairman of the National Turkey Federation.

If corn were to rise to $10 a bushel, Richard Lobb, spokesman for the National Chicken Council, said recouping costs through higher retail prices may not be possible.

"Can you possibly charge enough for the chicken to recoup that investment?" he said. "That's a question no one can answer yet because it's never been done."

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