Market Experts See Challenges for Livestock Producers

SALT LAKE CITY, January 7, 2007 – The 2007 agricultural marketplace will be prosperous for some sectors, but challenging for livestock producers, according to a forecast given at the American Farm Bureau Federation’s 88th annual meeting. Industry leaders projected revenue to be lower in 2007 for all meat commodities, according to AFBF livestock economist Jim Sartwelle, University of Missouri Extension economist Ron Plain and U.S. Meat Export Federation President and CEO Phil Seng.

There are many key factors behind the downward trend. The economists said a lack of forage, continuing drought conditions and already harsh winter storms are dimming this year’s outlook. The economists noted that skyrocketing production costs will hurt livestock producers’ income. A primary reason for increased production costs is the intensifying demand for biofuels, which is pushing feed costs significantly higher for all livestock commodities.

“All protein producers are going to face a challenging year in 2007 when it comes to increasing feed costs,” said Sartwelle. “We are sure to see producers limiting the size of their production capacities because it just doesn’t pay to keep animals around with $3.50-per-bushel corn. This is the first time we’ve seen $4 corn since 1996.”

While many borders remain closed to U.S. meat products, Seng believes progress in the international marketplace is the best way to sustain prices. Plain agreed, noting that trade was prosperous for U.S. pork producers in 2006 and will continue in 2007, with Japan as the largest export market and trade with South Korea growing 54 percent. Beef trade, however, is lacking.

“We have had some progress with Colombia, Peru and growing potential in Russia. Japan is open with limited access and South Korea is a very challenging situation,” Seng said. “The South Korean government isn’t even popular in South Korea and even less here. We are dealing with politics and have been dealt a rough hand of cards.”

Seng said 85 percent of all meat produced is consumed outside of the U.S., further amplifying the need for more aggressive international efforts.

“The international marketplace is a win-win for producers. One way we can get more products overseas is traceability and I foresee more work pointed in that direction,” Seng said.

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