Sunday, May 11, 2008

By KENT DINNEBIER
Clarinda Herald-Journal

The high demand for corn is creating uncertainty in the cow calf industry in Iowa.

"There is a lot of volatility right now because of the demand for corn to be used in fuel production, so this is going to be an interesting year," Iowa State University Extension Livestock Field Specialist Joe Sellers said.

Iowa has already been losing pasture ground to the Conservation Reserve Program (CRP) and recreational uses and now the opportunity to raise corn and cash in on high grain prices is threatening to take more of the state's pasture land.

"This state is different from other places in the country because there is the opportunity for the land currently used to raise cattle to be used for something else. Our concern is the continued loss of pasture land could erode the opportunity to raise cattle in Iowa," Sellers explained.

At the same time, recent increases in land prices are having a direct impact on the cost of feeding cattle and the land charges for pasture operations.

As a result, cattle producers must find ways to reduce the costs of running their operations.
One answer is finding cheaper ways of feeding cattle rather than the typical hay diet.

"Some of the ways this can be done is by feeding the cattle corn stalks or silage along with the bi-products from the ethanol plants," Sellers said.

Until last year cattle herds in Iowa and throughout the Midwest had been increasing, but this past year that trend has reversed and there are now fewer cows in Iowa.

The cattle industry tends to operate on an 11 to 12 year cycle and normally this would be a time of expansion in the industry.

However, the market is signaling that it is becoming increasingly difficult to run a profitable operation.
"We are not following the normal trends. Higher costs and droughts in various parts of the country have been derailing that cycle," Sellers said.

Despite these factors that are causing uncertainty in the cattle industry, Sellers said Iowa has not sustained a huge blow yet and is actually better prepared to withstand these challenges than cattle producers in other parts of the United States.

The reason for this is that while feed costs in Iowa have risen, they are still lower than other parts of the country like the southern plains.

Therefore, Sellers said growth in cattle production could return to the Midwest in time.

The versatility of Iowa cattle producers, Sellers feels, will also help them weather the volatile market conditions.

"Most cattlemen in Iowa also raise row crops. That enterprise is very successful right now, so if they diversified they actually have more capital available for improvements and are doing quite well. The ones who are being hurt are the ranchers who do not have row crops and the cattle feeders," Sellers explained.
If corn prices remain high, Sellers said Iowa could actually see a larger impact on its water quality than on its cattle industry.

The reason for that is the lure of high corn prices could persuade farmers to plant crops in less than ideal soil.

"Farming marginal ground can have an impact on erosion and our water quality. The really marginal soils are not that productive for row crops and are probably still best suited for pasture or hay," Sellers concluded.