NOBULL: RE: Ranchers seek alternatives to expensive winter hay — Heaven help us if feed prices go back to where they were 5 years ago.
Mike, the first evening I met you, probably around 1998, we discussed the impact of grain subsidies on agriculture as a whole; about how artificially cheap commodities distort costs of production between the three main meats, beef, pork and poultry. We discussed how artificially cheap feedgrains caused production far past the point of optimum industry returns and therefore deep into the red.
Due to their absurdly subsidized abundance, artificially cheap feedgrains also kept ranch feed values artificially low, because it became cheaper to grow calves in feedlots rather than on ranches. This caused more cows to be raised and thus more calves to be produced…… and thus more meat to be produced….. and thus lower prices for meat than would otherwise have been the case. Cheap subsidized commodities distort the production of meat in favor of poultry and against beef.
Since ranch feed (grass) values were so low, many people were forced out of production agriculture, and this explains why so many ranches were converted to ranchettes and non-ag use.
Then along came another absurd set of subsidies centered around ethanol. And now, with this double set of absurdities working somewhat against each other, the market values of native feed and hay have have actually returned to somewhere around where they ought to be. That’s real government in action, always at least doubly absurd!
Heaven help us if feed prices go back to where they were 5 years ago. Meat production will rise exponentially and commodity prices will go to real-dollar lows not seen for generations.