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Livestock industry hit hard by high feed costs, weak economy

Published on 2 July, 2009, Last updated at 03:50 GMT

The livestock industry is in one of its worst economic slumps in decades. It's hit just about every sector: hogs, dairy, beef and poultry, and it's causing farmers a lot of stress.

Step into nearly any livestock barn in Minnesota and there's a good chance you're entering a world of financial difficulty.

In a building near Wood Lake in southwest Minnesota, farmer Dave Schwerin is housing some young hogs. "We just moved these in a week ago," Schwerin said.

Schwerin said the 1,000 or so pigs look great, he said they're healthy and energetic. What pains him though is that he won't make any money on the animals.

"Based off the numbers I ran this morning, these will probably cost us about $19 a head," Schwerin said.

That translates into a $19,000 loss; a lot of red ink for a major Minnesota business. State farmers raise more than 15 million hogs a year with a total value over $2 billion.

Schwerin said he knows he's not alone. He said he also owns a trucking business and meets farmers from all over the state. He said dairy farmers are hurting just as bad, or worse, than hog producers.

"Milk is unbelievably low [and] I know they're talking about whether they're going to stay in the industry or get out," Schwerin said. "I do feel their pain. Nobody needs to live that life, it's too much work for no reward."

Whether it's hogs, dairy, cattle or poultry, there are some common sources of troubles for the livestock industry. Iowa State University's Bruce Babcock said a big one is a dramatic rise in the price of feed for the animals.

"Feed costs really starting rising about two and a half years ago because of increased demand for corn for the ethanol industry," Babcock said.

The high corn prices helped boost grain farmers to some of their best profits ever. But they hurt livestock producers, and there was more trouble ahead. As the world fell into recession, consumers cut back on food purchases.

"When demand for our livestock products dropped off, that's when the livestock industry really started suffering," Babcock said.

There was too much product on the market. Buyers took advantage of that by bidding prices down.

Farmer David Schwerin said, even after the recession took hold, there was still one more major blow yet to fall on the hog industry.

That happened in April, when what initially was called swine flu grabbed headlines around the world. Suddenly, just as the summertime barbecue season was getting under way, some people were afraid to eat pork. Through it all, Schwerin tries to stay positive. He's 50 years old, and says more than three decades in farming have taught him that the psychological battle often is the most difficult part of hard times.

"Your mind will take you out of business faster than your wallet," Schwerin said. "So a person has to keep positive."

That battle of the mind appears to be something many farmers are struggling with. Dave Therkelsen is executive director of the Twin Cities-based Crisis Connection, a call-in counseling service. One of its telephone lines caters to farmers.

"The most pronounced trend we've seen is just a pretty dramatic increase in the number of calls we get," Therkelsen said.

He said calls are running 60 percent ahead of last year. He said he can't attribute all of the increase is to the troubles in the livestock industry, but said it's a good assumption that those problems are a leading factor in the rising number of inquiries. He said those farmers lack control right now of their economic destiny and that can cause mental health issues.

"Price of commodities, the cost of inputs to your business, what you can sell your products for, all of these are out of control of these smalls businesses that we call farms," Therkelsen said. "And it makes for a very stressful professional existence."

There's no real end in sight. Many analysts expect a rebound for livestock farmers by the end of the year, with stronger profits by 2010. But that's no guarantee. Last year at this time the same experts issued much the same forecasts for this year.


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