That's the analogy that Barry Dunn gave about ethanol at this week's Southwest Beef Symposium in Amarillo. But with a twist. "The ethanol industry is a freight train going down the tracks. Hardly anybody knows where it's going, they're laying the tracks as they go and pulling them up behind because there's little chance we're going back."
Dunn, a Midwest native and executive director of the King Ranch Institute for Ranch Management at Texas A&M University-Kingsville, said while few people know the eventual outcome of the ethanol industry, its effect on cow-calf producers is clearly evident.
Using a Cattle-Fax projection that fed cattle will average $84/cwt. in 2007, Dunn said corn prices at $3.50/bu. puts a 550-lb. feeder steer at $99.25. Corn at $4 puts that steer at $87, and $5 corn puts him at $62.71.
"We're not there yet," he said of feeder cattle prices, meaning the market has some downside potential this year. Dunn called on ag to begin an earnest debate about the full effect of ethanol not only on ag as a whole, but on society as well. In many regions, ethanol is viewed as apple pie and motherhood. "But its not. It's not apple pie and motherhood to a rancher in West Texas."
-- Burt Rutherford