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Adjusting to normal"It's about time," said the corn producer. "It's about time cattlemen come down to the real world," he said. He was upset with cattlemen who were worried about what rising corn prices will do to their bottom line. "We've got feedlot operaters that have been buying our corn way too cheap." Yes, I understand his point, but thank goodness for those feedlots or this gentlemen wouldn't have had a market at all. The nature of agricultural business ties certain segments together so each does exist not as a sole entity but in relationship to each other. Where we are now in the market is an anomaly--something much different than the norm. Very recently, market forecasters predicted the affect that renewable fuels would have on the grain markets, but it will take much longer for the markets to adjust. A corn farmer's good fortune, however, can be detrimental to their agricultural brothers, cattle and hog producers. It is a very real issue when input costs double in the course of one year. Renewable fuel plants are a new market for corn that has exploded thanks to government incentives. It has been a spike, not a slow and gradual build that allows for market adjustment. As Congressman Collin Peterson (D-MN) said recently, renewable fuels is something that both rural and urban people can get behind. It makes sense for the environment. It make sense for national security. And it make sense for agriculture. What doesn't make sense is for one segment of agriculture to be happy about hurting the profitability of the other. As I discussed the situation with the corn farmer, I told him how many cattlemen's organizations are working to try to come up with ways to help hold down feed costs that won't take away from a corn farmer's opportunity. He scoffed. What we need is to find a new normal that will allow farmers to take advantage of higher grain prices that doesn't put cattlemen out of business. But that's going to take some time. It might mean that renewable energy will come from biomass sources instead of corn. It might mean that cattlemen adjust their rations to feed by-products of ethanol production. Or it might mean any number of other opportunities that will take some time to come to fruition. It's encouraging to see the innovation of agricultural producers as they constantly adjust. Ask any corn farmer or cattleman if his production was about normal last year and his answer likely will be, "Tell me what normal is first." Thanks to the push for biofuels we are setting new normal levels for corn producers and corn users alike.
Holly Martin can be reached by phone at 1-800-452-7171 ext. 1806 or e-mail at hmartin@hpj.com. B 4 1/29/07 6 Star Midwest Ag Date: 1/24/07
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