January 9, 2007

2007 a challenging year for US livestock producers

The  agricultural marketplace in the US is expected to be prosperous for some sectors but challenging for livestock producers, according to a forecast given at the American Farm Bureau Federation's, or AFBF's, 88th annual meeting in Salt Lake City, Utah, Sunday (Jan 7) and reported in a release Monday.

At the convention, AFBF livestock economist Jim Sartwelle, University of Missouri Extension economist Ron Plain and US Meat Export Federation (USMEF) President Phil Seng projected lower revenues for all meat commodities.

There are many key factors behind the trend, they said. A lack of forage, continuing drought conditions and already harsh winter storms are dimming the outlook.

The economists said skyrocketing production costs, primarily from greater demand for biofuels, could hurt livestock producers' income.

"All protein producers are going to face a challenging year in 2007 when it comes to increasing feed costs," said Sartwelle. "We are sure to see producers limiting the size of their production capacities because it just doesn't pay to keep animals around with US$3.50-per-bushel corn. This is the first time we've seen US$4 corn since 1996."

While many borders remain closed to US meat products, Seng believes progress in the international marketplace is the best way to sustain prices. Plain agreed, saying trade was prosperous for US pork producers in 2006 and will continue in 2007, with Japan as the largest export market and trade with South Korea growing 54 percent. Beef trade, however, is lacking.

"We have had some progress with Colombia, Peru and growing potential in Russia. Japan is open with limited access and South Korea is a very challenging situation," Seng said. "The South Korean government isn't even popular in South Korea and even less here. We are dealing with politics and have been dealt a rough hand of cards.

"The international marketplace is a win-win for producers. One way we can get more products overseas is traceability and I foresee more work pointed in that direction," Seng said.