Sunday, September 19, 2010

A Concern For Beginning Livestock Farmers, A Commodity Grain Bubble

Maybe you have noticed that the price of food at many grocery stores have gone up. These prices increases are linked to an increase in commodity grain prices. Commodity grain prices (Corn, Soybeans, Wheat, rice, etc.) are increasing for several reasons.

The first is climate change. A massive drought in Russia and wet conditions elsewhere are sending wheat prices soaring. As weather has become more volatile (more persistent droughts and more torrential rainfall), grain supplies have become less consistent and prices have become more volatile. Since grains can often be substituted for other grains, they all become volatile when one becomes volatile.

Demand for commodity grains has also increased as populations in developing counties have become more affluent and can spend more money on foods, like meats. 

Another alarming force driving up commodity prices is speculation. Since the crash in the markets in 2008 and the subsequent fall in oil prices, there has been a considerable amount of investment money sitting out the sidelines. This money has been looking for a place to go make money after sitting in "safe" places like treasury notes. With the upward trends in commodity prices speculative forces have been moving considerable funds in those directions applying further upward pressure on prices and generating a likely bubble in commodity grains. 

Inflated grain prices hurt livestock producers by increasing what they pay for feed and eliminating thin margins. The same is true for us beginning livestock farmers. As an example, I was paying $0.13 per pound of poultry feed a month ago and now it is up to $0.22 per pound, about a 40% increase in a month. 

I am worried about what the future might hold for us beginning livestock farmers. Many of us rely on quick turn around animals like poultry and hogs to cash flow our business. To lessen our reliance on purchased feed, we have been and will continue to expand our lamb business. Our lamb rely on no purchased grains and as such have a much more stable pricing and margin for us to rely on in the future. 

Cattle & Sheep out on Pasture, Low Input Agriculture at its Finest

Now it is time for our shameless plug. We have 4 lambs going to the locker in the middle of October and they will be ready for our November delivery runs. 

Whole Lamb: $235 (approx. 40-50 lbs of meat)
1/2 Lamb: $125 (approx. 20-25 lbs of meat)

Lamb Chops: $10 per pound
Leg Roast: $8.50 per pound (likely 4-5 pounds each)
Rack of Lamb: $12 per pound
Ground Lamb: $5.50 per pound
Stew/Kabob Meat: $6 per pound

Thursday, September 9, 2010

Another One Bites the Dust

I have made some progress recently, getting the last batch of chickens outside, and getting the surviving older turkeys set-up for ranging, despite not having any free weekends in August to stay caught up with.

The Last Batch of Chickens for 2010

Older Turkeys Ranging and Resting in Portable Roost

Unfortunately, this morning I had to bury one of my best ewes. I just found her dead in the middle of the herd this morning with no visible cause of death. The number of dead animals on the farm this year has been disheartening. We have to my tally lost 4 ewes, 6 lambs, 26 layers to predators, a handful of broiler chickens, and over 200 turkeys. Losing the lambs hurts, but the loss of so many turkeys is really hard on morale and our bottom line. Normally, I have always enjoyed turkeys, but this year I just want to wash my hands of that side of the business. Turkeys usually have a high mortality rate of 10 to 20 percent, but this year it is close to 80 percent. I have been on some list serves and have found that many others have struggled with turkeys this year. The wet weather is the direct culprit of about 25% of the turkey deaths, with smothering making up most of the remaining 75% of losses. Since we are on pace to finish only 60 turkeys this year (we finished 125 last year), I have made arrangements for an additional batch of birds yet this year. I have 50 birds purchased and are currently being brooded on another farm before they come to me. This last batch will be ready in mid-December. Too late for Thanksgiving, but in time for Christmas. I am not looking forward to this batch of birds because they will represent numerous challenges to raise during the colder months. I am hoping that we do not get heavy snow on December 6th like in 2009 or I will be in real trouble.

Digging a Sheep Grave

Fencing has been making little progress, but I got back to it today for the first time in weeks. This weekend, I hope to make much more progress. I picked Hazel up from the babysitters this afternoon and we spent some time out on the pasture; she slept while I ran some fence wire. The fact that it is cool enough to take Hazel out to the pasture during the day is one of the things that I have been looking forward to this fall.

Hazel Accompanying Me Out To Pasture