Livestock & Dairy Commodities.

Livestock & Dairy Commodities. I’m Greg Martin with today’s Line On Agriculture.

I spend quite a bit of time walking the aisles of my local grocer looking at products and prices and one thing is for sure, it’s a tough time to be a meat or dairy producer in the United States. Those producers have a lot to contend with these days which makes for a difficult road to travel. American Farm Bureau livestock economist Jim Sartwelle says those farmers and ranchers are being forced to decipher a lot of mixed signals.

SARTWELL: Livestock producers use a lot of feed.  Feed prices are relatively low now compared to where they’ve been in the past couple of years.  Should indicate some really good times if you’re in the livestock or dairy business.  However at the same time the economy stinks, as a rule.  As the economy stinks, people’s demand for the products that livestock and dairy farmers are producing goes down.  So at the same time they’ve got these signals that say stay in, expand, they have price signals that tell them hey this thing might not be very good and might not be very good for a while.

Sartwelle says the outlook isn’t likely to change much until consumers believe the economy has bounced back. 

SARTWELL: The one ray of hope that they have right now is that their feed costs may come down because we expect a very large corn crop this year. It’s probably helping a lot of dairy and pork farmers postpone some really tough decisions about whether or not to exit the industry. 

The bottom line is that the bad news for farmers and ranchers is good news for consumers shopping the meat aisle.

SARTWELL: While we continue to see food prices decline from their record highs of last summer, we hope that consumers keep in mind that the farmers’ share of the retail food dollar is less than 20 percent and that if prices do go back up, it’s not the farmer or rancher that are getting fat and happy. 

He gives a rather gloomy outlook for livestock and dairy producers.

SARTWELL: Things are probably worst for dairy and hog farmers right now.  They’ve had a longer period of sustained losses than beef cattle and poultry producers. We’ve seen inventories go down markedly in the beef cattle sector.  Prices are low, other costs outside of feed are really high right now.  So it’s really tough to make a living, especially in the hog and dairy sectors.

Sartwelle talks more about mixed signals in the beef sector.

SARTWELL: With beef, we have fewer cows in this country than we’ve had since John Kennedy was President.  That should dictate higher prices for beef.  However, with the economic slow down, consumers have had a pretty good run of very affordable beef prices, not to mention much cheaper milk and other livestock products. 

That’s today’s Line On Agriculture. I’m Greg Martin on the Northwest Ag Information Network.