Canadian cattle feeders heard from two leading agricultural economists that the industry here can expect little relief from high grain prices and border conflicts now that both houses of congress in the United States are controlled by the Democrats.
Larry Flinchbaugh of Kansas State University said high grain prices caused mainly by ethanol and biodiesel production booms will not change.
He told people attending the Saskatchewan Cattle Feeders’ Association annual convention in Saskatoon Jan. 27, that with increasing demand for grains to fill demand from biofuel refineries, two of the three main U.S. farm subsidies will see little action but will remain part of the new U.S. farm bill.
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He said the marketing loan and counter cyclical programs would be idled due to high prices. Republicans had intended to idle them permanently if giving the legislative opportunity.
“That’s not on under the Democrats,” he said.
But biofuels are on their agenda, so subsidies and growth of that sector are encouraged, which will put upward pressure on grain and oilseed markets for the next three to five years.
Larry Martin of the George Morris Institute in Guelph, Ont., agrees that the problem of high grain prices will be around for some time, but he also told cattle feeders that they can expect the international market to come to the rescue.
“Whenever there are high prices, for whatever reason, you can expect grain farmers around the world to find a way to overproduce and sink their market.”
“There will be $2 (per bushel) corn again. And you won’t have to wait forever to see it,” he said.
While it may have seemed for Canadian livestock producers that American country of origin labelling has been on the agenda forever, Flinchbaugh said it has arrived.
“You’ll see it this year on beef,” he said.
He wasn’t so sure about pork and poultry, but said the Democrats had campaigned on the promise and would deliver.
Martin said in previous proposed models, three classes of cattle would exist, requiring three labels and three slaughtering and marketing streams: all Canadian, Canadian born–U.S. fed and all American.
Flinchbaugh said Canadian cattle producers must promote their beef in the U.S. and create demand for the brand. Martin was not as optimistic of that happening.
He said it will likely result in higher costs for packers and a lowering retail demand, both of which will be passed on to Canadian cattle producers in the form of lower prices.
Flinchbaugh said the Conservation Reserve Program would see an official drop in acreage in this farm bill to 34.1 million acres from the 36.3 million that are currently funded. He expects that under the Democrats a shift from ethanol based on corn kernels to corn stover, woodchips and switch grass will occur beginning later this year.
“And they will be allowing CRP land to be used to grow and harvest that switch grass, putting it back into the system and removing corn acres from ethanol,” he said.
“Corn is too important in food production. In the production of livestock. And it can’t be $5 corn for that,” he said.
