Cutbacks Coming on Back of Corn Inflation

They warned of production cutbacks in the beef, pork and poultry sectors, citing corn futures prices that point to another 30 percent increase in already-escalated feed costs next year.

According to Meatingplace, Seaboard Foods CEO Rod Brenneman told reporters on a conference call that sow slaughter will continue and there will be fewer hogs and less pork in the marketplace by later this year.

Calling the effect of the current Renewable Fuels Standard on livestock producers "a classic case of unintended consequences," Brenneman said, "With one bushel of corn, you can produce approximately 20 pounds of pork, or 2.5 gallons of ethanol, but not both."

Mark Hickman, CEO of Peco Foods and chairman of the National Chicken Council, said the poultry industry is entering a second phase of production cutbacks, following a 1 percent to 2 percent cutback in production earlier this year, reported Meatingplace. "We are hearing talk that this was not nearly enough, so liquidation is in round two."

Paul Hill, West Liberty Foods chairman who also heads up the National Turkey Federation, forecast a minimum 10 percent to 15 percent liquidation of the nation's turkey herd in response to higher feeding costs.

"We're in the commodity business. We don't get the privilege of tacking on our costs to the public," said James Herring, CEO of Texas-based cattle-feeding operation Friona Industries. "Operations all over the Texas Panhandle and the U.S. are under these pressures and closing their doors as we speak."

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