Published on 07/31/12

Midwest drought costs Georgia poultry producers big bucks

By Michael P. Lacy

Severe drought in the Midwest corn-belt is driving up poultry feed costs in Georgia. Economists and poultry industry experts predict corn costs will increase 50 percent in 2012 compared to typical years. Some economists say corn prices could double by the end of the summer.

Corn is the single largest ingredient in poultry diets and usually makes up 60 percent of the total weight of a poultry ration.

Consider this: Each year, Georgia produces 1.3 billion broiler birds. Each bird eats 10.45 pounds of feed. In a non-drought year, corn is about $5 per bushel. The cost of corn as a result of the drought: $7.50.

A $2.50 rise in corn prices will cost the Georgia poultry industry more than $430 million per year in higher feed costs. These higher prices will cost the typical Georgia broiler complex $1.1 million in additional feed costs per month equaling more than $13 million per year.

On an individual broiler farm, the annual increase in feed costs would exceed $155,000. A broiler breeder farm would pay $63,000 more.

The uptick in prices is intensified by the demand for corn to make ethanol. Biofuel plants now buy more corn than poultry and livestock producers combined.

In spite of last year’s particularly strong corn harvest, corn reserves hit historic lows this spring. Experts are concerned the lack of corn reserves, continuing ethanol mandates and the current drought will lead to severe grain shortages and unprecedented price spikes in the coming months.

Soybean is the other major component of poultry diets. It’s still too early in the season to tell if the drought will affect the 2012 soybean harvest as severely as the corn harvest. However, experts expect soybean prices, which typically rise in step with corn, to be higher this year than usual, serving Georgia poultry producers a second helping of price increases.

Mike Lacy is head of the University of Georgia College of Agricultural and Environmental Sciences Poultry Science Department.

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