ISU economist says prices to rise again this year


By Hannah Furfaro - Ames Tribune (IA)

January 15, 2013


Supermarket prices for beef are expected to rise for the second year in a row this year, as much as 4 percent, according to an Iowa State University economist who studies cattle market prices.


The increase would follow a jump of 6.5 percent in 2012, experts said Monday.


ISU livestock specialist and economist Lee Schulz, who does projections based on cattle production and liquidation, said fluctuations in retail prices for beef and pork are typical, but the double-whammy of last year’s drought conditions and prior years of high liquidation rates of cattle herds will cause higher-than-average increases in supermarket prices over the next several months.


“That’s what’s interesting,” he said. “Are consumers going to be willing to accept those higher prices, and how much less (beef) are they going to consume?”


Beef production across Iowa has remained relatively stable compared to other states, according to Dan Loy, the head of the Iowa Beef Center. Loy said farmers in Iowa, the sixth-largest cattle producing state in the nation, found “creative” ways to feed their cattle during tough times over the past year.


“They’ve had access to some salvage feeds, drought corn silage,” he said. “There were more corn stalks harvested this (past) year than perhaps any year in history for use for beef cows.”


Other states weren’t so lucky. Overall, the total number of cows processed nationally last year was down 12 percent, according to U.S. Department of Agriculture data.


In Iowa, 2013 could be a year of uncertainty for cattle producers.


A second year of drought conditions and dwindling feed supplies could cause many farmers to liquidate their herds, Loy said.


“A year ago we were poised to grow the beef herd in Iowa,” he said. “But the drought put a crimp in a lot of beef producers’ plans. That expansion, I think, has been delayed at least a year or so.”


Stephanie Hansen, an animal science professor and beef nutritionist at ISU, called this year’s conditions a “super storm” of high cattle prices and high feed prices.


Hansen is doing research on alternative feedstuffs for cattle, and said some farmers are looking to increase their use of distillers grains, a byproduct of ethanol production, to feed their cattle. Her research has become particularly relevant during the recent feed shortage, she said...