Escalating corn prices create market volatility
May 18, 2011
by Meat&Poultry Staff
TUCKER, Ga. – Escalating corn prices in recent years have wreaked havoc in the US meat and poultry industry by helping to raise production costs, as well. It’s no wonder industry executives are uneasy as they review past trends in planning for the future.
"In 2006, corn was $2.56 a bushel. In 2009, corn had reached a 'new normal' at $4.00 a bushel. In March 2011, corn was more than $7.00 a bushel. This has added about 7 ½ cents per live lb. production cost," said Mike Donohue, vice president for Agri Stats Inc. during his presentation at the recently held 2011 Poultry Processor Workshop, sponsored by US Poultry & Egg Association's Poultry & Egg Institute.
The future's market is indicating corn will still be over $7 through the end of 2011 and into 2012, Donohue said. In addition, the cost of soybean meal is up, with the "new norm" at $380 per ton – adding another 5 cents per lb. in live cost. With 68 percent of live cost coming into the plant as feed and grain expenses, plants have to be good in all areas of production, he continued.
Insights into other industry challenges were also provided, such as dealing with regional challenges in finding labor, issues with water consumption and water treatment, continuing emphasis on improving plant efficiencies and yield.
"Work on efficiencies, maximize yields, and we will work through this," Donohue concluded.
Immigration/Managing ICE (US Immigration and Customs Enforcement) Enforcement Actions was presented by Mark Reed, CEO of Boarder Management Strategies. He discussed the current administration's focus on “wanting employers in handcuffs and not workers,” according to a press release. It took hundreds of agents working hundreds of hours to conduct the ICE raids of 2008, he said. But the focus for 2009 – 2011 has changed to the employer, with the government going after management. ICE is fining companies for non-compliant I-9s, and this has become a source of revenue for ICE, according to Reed.
"Spend time and money to make sure I-9s are correct and technically compliant," Reed warned. Companies would be well-served to produce a document on hiring policies if they are targeted for inspection by ICE, he added.
Tom Wisvari, Cooper Farms plant manager, provided a Case Study in Gas Stunning of Turkeys. Wisvari discussed Cooper Farms' process of stunning its turkeys on transport trucks. With the help of Praxair, the company has implemented a gas-stunning system that helped achieve its objectives, some of which are reducing physical stress on employees, eliminating live shackling of turkeys, increasing meat yields and labor savings.