ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, April 20, 1996 TAG: 9604220017
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Virginia farmers, suffering because of record high prices for feed corn, are facing the prospect of slaughtering livestock, but a Virginia Tech agricultural economist is advising that could make a bad situation worse.
"If at all possible, let's not make a long-term, irreversible decision, if what we're looking at is a short-term catastrophe," said Virginia Tech's Wayne Purcell.
The state's farmers grow roughly 30 million bushels of corn a year but use more than twice that much to feed their livestock and poultry. Because the price of corn is more than $5 a bushel - twice what it was three years ago - Virginia farmers have been put at a competitive disadvantage with farms in the Midwestern corn belt, Purcell said.
Beef and cattle producers and dairymen have been put in a particularly tough spot because the high feed prices are coming at a time when cattle are selling at half the price they were about three years ago.
Purcell is advising the state's farmers to do what they can to cut expenses and consider borrowing money if necessary to survive in the short run. Because the new federal farm bill allows farmers nationwide to plant as much corn as they want this year, national corn stocks should increase, meaning the price of corn should drop by the September-October harvest, he said.
Cecil Worley, a Bedford County dairy farmer, said the last time he bought corn he paid $4.84 a bushel, but he priced it this week and it was $5.20. Worley said he's trying to keep expenses down and has been grazing his cows on grass now while it's lush and growing. Later in the summer, the grass won't provide the protein his dairy cows need, he said.
John Byrne, who keeps cows and raises calves in Bedford County, said that when he sold cattle about a week ago, they brought half of what he was getting 21/2 years back. "They're telling us it's the high corn prices," he said.
Byrne raises all the corn on his farm that he needs for feed. But high corn prices aren't all the cost pressures on farmers now; fertilizer and fuel are up too, he said.
With cattle prices low, it might be a good time to get into the cattle business, Byrne said. "A farmer has got to be an optimist as well as about half an idiot," he said.
The pressure of high corn prices has caused the suspension of buying calves and raising them for sale to feed lots at Morven Farms, a 7,000-head-a-year operation near Charlottesville. The farm, owned by billionaire John Kluge, raises about 1,000 acres of corn or about two-thirds of the feed it needs, said manager Curry Roberts.
The higher corn prices are a result of a shortfall in the national corn crop last year caused by poor weather and national farm policy that restricted corn production.
With the government having freed farmers to plant all they want, a good corn crop should bring feed prices down. But Purcell cautioned that the country's reserve stocks of corn, which provide a cushion against a crop failure, are the lowest he has ever seen. Another short crop this year could present farmers with an even bigger crisis in the summer and fall, and they should consider that possibility when they think about borrowing, he said.
Purcell said he is particularly concerned about the possibility of losing more state dairy farms. During a similar period of high corn prices in the mid-80s, many dairy farmers closed their operations, he said.
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