Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, September 22, 1995 TAG: 9509220071
SECTION: BUSINESS PAGE: A9 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
Prices this year have dropped as much as 27 percent below what they were in 1993, and farmers are getting as much as $166 a head less for their cattle, according to figures compiled at Virginia Tech.
"It's bad, real bad," said Bill Guthrie, a Pulaski County beef producer. "I'm 70 years old and the worst year we've had was last year," he said.
Beef prices are so depressed, in fact, that the Virginia Cattlemen's Association, based in Daleville, recently mailed a news release on the problem, something it has not done before.
"It's gotten right serious," said Reggie Reynolds, executive secretary of the cattlemen's group. "It's crunch time, I'll tell you that," he said. "If we go through another year like the last two, it's going to take some of these guys out of the cow business."
Prices dropped between 1993 and 1994 because of a glut of cattle on the market and continued their slide this year because of weather problems in the Corn Belt that have driven up the price of corn, he said. Midwestern feed lots use corn to fatten up cattle for slaughter.
Corn prices are 50 cents a bushel higher this September than they were last September. Feed lots accommodate the higher corn price by paying farmers less for cattle. "If we'd had a good corn crop, we'd have ridden through this thing without a crisis," Reynolds said.
The August drought complicated the cattle-price problem, Reynolds said, by forcing Virginia farmers to sell their animals earlier and at lighter weights than they had planned.
Cheaper alternative meats like chicken also played a role in the price drop, Guthrie said. He also said he suspects some of the major beef packers are working together to keep the price of cattle down.
Guthrie and his son Joe, both Virginia Tech graduates, work a cow-calf herd of about 300 head on a farm near Dublin. They raise calves until they weigh between 700 and 1,000 pounds, then sell them to a feed lot. "Our net income last year from this kind of business dropped to almost nothing," he said.
The Guthries have two employees who they continue to pay the same wages, and their other expense aren't going down either. Fertilizer expenses have increased 10 to 25 percent in the past two years, Guthrie said. Anhydrous ammonia that he mixes with his corn before he puts it in the silo has jumped from $200 to $400 a ton in the past two years.
Guthrie said he hasn't bought a tractor since the early 1980s. A tractor he bought in 1979 for $19,000 now would cost more than three times that, he said.
He said he worries about his son who, like him, is going to try to make a living farming. He said he doesn't expect prices to improve next year but says he can't keep farming if they stay down..
"But some idiot will keep on farming," Guthrie said. "You aren't going to starve."
by CNB