Farming is like a seesaw. You’re going either up or down. And
whichever you’re doing,
the person on the other end must do the opposite.
So now, when feed grain prices are dropping, cutting profits
for grain farmers,
livestock farmers’ profits are on their way up.
"When feed grain prices drop, it costs less for poultry
farmers to raise their
chickens," said Stan Savage, a poultry scientist with the
University of Georgia
Extension Service.
In the past two months, feed grain costs have dropped about
$1.50 per bushel, Savage
said.
"A good rule is that for every 10-cent-per-bushel drop
in grain prices, it costs
two-tenths of a cent less per pound for the consumer to buy
chicken," he said.
But since we don’t buy anything in tenths of a cent, you
probably won’t see dropping
grain prices reflected at your grocery store’s poultry case.
"Until production costs drop 2 cents to 3 cents per
pound," Savage said,
"retail prices aren’t likely to drop." And even then,
it will probably take 10
to 12 weeks for consumers to see a price decrease."
Savage explained that many poultry companies buy their feed
supplies months in advance.
So a feed grain price drop today won’t affect the cost of the
grain they buy for another
two or more months.
But the industry will feel it.
Georgia ranks a close second in the nation in poultry
production. Only Arkansas
produces more poultry products than Georgia farmers, who raise
105 million pounds of
broilers every week. That pumps more than $1.2 billion into the
state’s economy every
year.
Savage said with so much poultry in the state, even a half-
cent decrease in per-pound
production costs can save the industry half a million dollars
every week.
Georgia invests a lot in poultry production. Although farmers
grew 580,000 acres of
corn, millet and soybeans this year, it isn’t enough to feed
Georgia chickens. The state’s
poultry farmers here have to ship in grains.
Georgia poultry farmers use two and a half million bushels of
corn every week in
chicken feed.
"We have enough land in Georgia to grow only a few
weeks’ supply of corn for the
chickens in the state," Savage said.
Dewey Lee, an extension feed grains scientist, said Georgia
farmers harvested a good
crop this year.
"The dryland areas had low yields," he said.
"But irrigated land —
about 35 percent of the acreage — had great yields."
Feed grain prices have been on the rise over the past year as
supplies dwindled. But
this year’s yields were high across the nation. Georgia farmers
planted 190,000 acres more
corn in 1996 than last year. Soybean yields are up, too.
"The increased supply right now during harvest will give
poultry companies the
opportunity to buy feed at lower prices," Savage said.
"Lower production costs
can help them increase the number of chickens on the market.
That drives retail prices
down, too."
Every week, Georgia poultry farmers produce enough chicken to
feed every person in the
United States about 5 ounces of chicken.
"When you’re looking at that much volume every day, all
year, even tiny changes in
production costs make a huge change in the value of the industry
to the state,"
Savage said. "Sometimes it’s good, as it is now. Sometimes
it’s not."
