This year’s drought has crop and livestock producers facing serious economic losses. Purdue Extension agricultural economist Chris Hurt says the losses in livestock industry will be enormous over the next year.
“They do not have any compensating balances,” he says. “Livestock producers are not going to be able to push up the prices of livestock products in the short run, but they have the higher feed costs and that higher feed costs are simply going to push more animal species into large financial losses.”
Livestock producers’ input costs are escalating to record high prices. In fact, Hurt says record high corn and soybean prices account for 50 to 60 percent of animal production.
He says those higher feed costs have to be absorbed by the livestock industry. “It’s only after the period of financial losses for producers cause them to be discouraged and reduce production,” he says. “This provides the basis in 2013 for smaller supplies of those animal products.”
Smaller supplies, Hurt says, will then raise the retail prices.
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