It costs a lot more this year to feed meat animals corn and soybean meal than it did just a few years ago. By the end of 2011, meat eaters will be forking out more money, as well, a Purdue University ag economist says.
Rising grain prices are pushing feed costs higher for U.S. livestock producers, says Chris Hurt. With feed making up as much as 60% of a livestock producer's costs, beef and pork producers are expected to reduce their herd sizes or leave them unchanged next year. Poultry farmers could increase production slightly.
That all adds up to sticker shock for consumers - especially those who eat beef, Hurt says.
"When we look at the period prior to 2007, corn prices were averaging closer to $2/bu. and we saw retail prices of beef average about $3.84/lb.," Hurt said. "Now corn prices are around $5.50/bu., and we're projecting for 2011 that we'll reach about $4.65/lb. for beef."
Three primary factors are contributing to the rapid increase in corn prices, Hurt says. As incomes rise in developing countries, people are buying more food. Also, the biofuels industry continues expanding and using more corn. And the weak U.S. dollar encourages larger corn purchases by foreign buyers who can afford to outbid domestic buyers for U.S. grain.
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