With the familiar economic downturn, rising gas prices and a steady increase in food and energy costs, what, if anything, is to blame? Could one of the main contributors of these problems be something so cleverly disguised as corn based ethanol? According to BJ Neill of Bolivar, Mo., the answer is “yes.”
BJ and his wife, Virginia, have been raising cattle for their entire adult lives and have been through the peaks and pitfalls of the cattle industry. “In the past 10 to 12 years, we have purchased beef cattle every week from local sale barns.” BJ looks to buy cattle, take them to his farm and feed them to a desired weight and condition before shipping them to a commercial feed lot in Kansas where they are fed commodities. BJ’s operation and most cattle operations depend heavily on crude oil and corn. “We have cut way back on numbers in recent months due to feed and energy costs," said BJ.
“Feed costs have more than doubled since last year, but cattle prices remain the same. Freight costs have also doubled as a result of ethanol.” The push for ethanol based fuel is favored highly by the national and local government. This has resulted in substantial tax based contributions to ethanol programs, BJ explained. The major problem with this renewable fuel source is the competition for the available corn. According to BJ, the production of beef cattle depends heavily on corn based products and when corn is sold to ethanol plants, the farmer is the one who suffers.
“Cattle will become cheaper because we’ll take money off of the calf at the sale barn because we can’t take it off of the feed. The finishing process at the feed lot is becoming very difficult financially,” stated BJ.
BJ has researched the ethanol dilemma mostly because it affects him where it counts; the wallet. “Our 7th district congressional representative Roy Blunt is on an energy committee and our governor Matt Blunt is pushing ethanol daily. They need to look at the damage it is doing to Missouri cattlemen. We have more cattle in the 7th district than any other district in the nation,” stated BJ with concern.
BJ said another concern he has is ethanol is being subsidized at 51 cents a gallon and South American ethanol is not welcome in the states as indicated by high import taxes. "What is the difference in buying South American ethanol with a 54 cent import tax and buying crude oil from the Middle East," BJ asked.
“I checked on projected corn prices and by December 2009 it will be at $5.65 a bushel and by the time it is processed it will be about $6.50 a bushel,” stated BJ.
Despite these hardships, there are still positives for beef cattle operations. A strong hay market with the cooperation from last year's weather has helped to offset some feed costs. Another bittersweet positive according to BJ is, “If this problem continues long enough, farmers will get out of the business and cattle prices are bound to go up.” Close proximity of sale barns in the area, BJ noted, provide a shorter commute and lower fuel bill for sale cattle.
“Even if you’re not a farmer it is evident this fuel problem is contributing to higher prices for everyday food prices. If the import taxes on South American ethanol were lowered to reasonable level it would relieve some of the strain on the states' corn production,” suggested BJ.
Even though the economic downturn may have been inevitable, farmers can’t help but wonder how ethanol has played into the recent trials. BJ recalled those past trials stating, “We’ve dealt with drought, but the ethanol problem is real difficult. You get over cycles, but this is getting worse by the month with no relief in sight. It just doesn’t seem practical to make energy out of a food product.”
