What is in this article?:
- Production destruction leads to both short-term and long-term demand destruction
- Hog situation dicier
- Farmers in some areas of the country appear to have dodged the bullet this time, while many others have seen it firsthand.
- The situation faced by farmers is production destruction.
- The current high prices have one certain result—more corn acres.
Hog situation dicier
With hogs—115 days gestation for a litter of 10 or more—things are a little more dicey, but by keeping gilts and sending older sows off to slaughter, pork production can be ramped back up fairly quickly.
The problem gets a lot dicier when it comes to cattle—280 days for what is usually one calf. So when a cow goes to slaughter early, it takes some time for cattle to get back to full production. And it is not Smithfield that makes the decision about sending those cows to slaughter. The decision is made by a cow-calf operator who relies mostly on pasturage. Additional cows are going to be sent to slaughter, with or without corn imports.
The extent to which short-term imports of corn into the U.S. helps to maintain current-year livestock production is one thing. But it is the long-term destruction of U.S. corn demand that is most worrisome to us, especially export demand.
The current high prices have one certain result—more corn acres. To the extent that farmers in Brazil, Argentina, and everywhere else, see these high prices they are going to increase their production.
In the longer-term, more worldwide production brings lower prices and, from the U.S. perspective, the destruction of export demand that otherwise would have been available to U.S. grain producers.
Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT’s Agricultural Policy Analysis Center (APAC). Harwood D. Schaffer is a Research Assistant Professor at APAC. (865) 974-7407; Fax: (865) 974-7298; email@example.com and firstname.lastname@example.org; http://www.agpolicy.org.