Drought and the impact on feed prices may be on the verge of
creating a financial disaster for the pork industry and other livestock species.
The crop stress which began in Indiana and Illinois is now spreading further to
the west. Most of the media attention has been focused on crop producers who
face large yield losses; however the animal industries may ultimately fare even
worse.
Crop producers have the potential for two compensating income
streams when yields are low. The first is what is called the"natural hedge."
When yields are low across a broad geographic area, then prices generally rise.
This is especially true when stocks-to-use ratios are tight as they are now.
Under these conditions a 10 percent reduction in national yield is offset by a
rise in prices that is substantially more than 10 percent. This means that
revenues tend to be less negatively affected by yield losses. Secondly, many
crop acres have some type of crop insurance that can help cushion the financial
blow of low yields. While these conditions hold on average, there will be
considerable ranges in how individual farm families are impacted. <Read More>
No comments:
Post a Comment