Drought Packs Punch On Protein Sector; Feed Prices Destined To Climb

Even with recent rains, ag leaders tell USDA Under Secretary for Farm and Foreign Agricultural Services that Michigan has yield loss.

Published on: Jul 19, 2012

To help ward off future collapse of the tart cherry industry decimated this year by frost, Scuse says he would investigate what's needed to get at least a crop insurance pilot program for tart cherries.

The run-up in commodity prices was already well on its way as Bruce Sutherland from Michigan Agricultural Commodities,  explained that unlike  1988, there is only a 7% corn carryover this year  versus more than six months in 1988.

Byrum says, "Farmers are always optimistic – almost to a fault. But, the reality is we have already lost yield potential.  Supplies will be rationed by price."

For consumers, Jim Zook, executive director of the Corn Marketing Program of Michigan and the Michigan Corn Growers, doesn't think it will reflect on food prices in the near future because only a small percentage of the cost of food is tied to the producer. "We could have a $2 sway in corn prices and that might equate to a 5 cent difference for the consumer. The farmers will take the hardest hit from this drought."

For other commodities, Jim Howe of Star of the West Milling in Frankenmuth, reports that the beet crop started with an unprecedented early planting, but is suffering from the heat and lack of moisture. "They are in survival mode," he says. For dry beans, "they are at a critical time frame," Howe says, "and as for cucumbers, some didn't even get planted without enough moisture."

Margins in ethanol did return some lately, according to Zook, "but that's short term," he says. "Facilities generally only reach out 30 days to buy corn. A Nebraska plant, that has deep pockets, has ceased operations. However, we can now bring in Ethanol imports from Brazil. The import tariff is off."