“An Economic Perspective,” a study by Thomas Elam of FarmEcon.com, indicates the ethanol industry “no longer needs a high level of federal support.” Elam says the influence of the federal support program, which consists of direct support to small ethanol producers and a tax credit of 51¢/gal. to fuel blenders who add ethanol to gasoline, has shifted from making ethanol feasible to causing significant increases in food costs and distorting farmer planting incentives.

Elam says, “If the ethanol industry achieves 100% E10 market share in the U.S., it would take about 200 million tons of corn annually. This is equal to a 10% reduction in the current global grain supply.” The American Meat Institute, National Chicken Council and the National Turkey Federation commissioned the study.

Corn driving up pasture

Strong demand for corn, fueled by a surge in ethanol production, brisk exports and the need for livestock feed, will also have an impact on U.S. pasture rent rates and hay prices, says Kevin Dhuyvetter, Kansas State University Extension economist.

“Historically, there's been little relationship between corn price and pasture rents,” he says. “Things are likely to be different this time around, though, given that high corn prices are due to an increased demand for corn, as opposed to a supply shock.”

The difference, he says, stems from the fact some land typically devoted to hay production will be diverted to corn production. Furthermore, there will be increased demand for grazing resources (putting upward pressure on rents), as producers seek alternatives to expensive concentrate-based feeding programs.

Panama fully open

Panama now accepts U.S. cattle of all ages, USDA's Animal and Plant Health Inspection Service (APHIS) says. Panama banned U.S. live-cattle imports after BSE was detected in December 2003. That year, Panama's importation of live U.S. cattle doubled what had been imported in the previous three years combined.

“Panama's decision demonstrates confidence in the U.S. ability to effectively protect animal health and food safety with science-based safeguards,” says APHIS administrator Cindy Smith. “We're pleased Panama and other trading partners are taking steps to align their import requirements with international standards that support full market access for U.S. cattle.”

Topps goes toes up

Topps Meat Co., Elizabeth, NJ, which had recalled 21.7 million lbs. of frozen ground beef due to potential contamination with E. coli O157:H7, closed its doors Oct. 5. “In one week we have gone from the largest U.S. manufacturer of frozen hamburgers to a company that cannot overcome the economic reality of a recall this large,” spokesman Anthony D'Ursohe said in a statement.

It was the fifth-largest recall ever, but it encompasses product produced over a 12-month time frame (Sept. 25, 2006 through Sept. 25, 2007), the overwhelming majority of which supposedly has already been consumed. Find a full listing of the affected labels at www.fsis.usda.gov.

Value of cattle byproducts
per 1,000-lb. steer
Year Hides Total Hides as % of total
1980 $27.77 $57.22 49%
1981 $27.74 $55.00 50%
1982 $25.97 $51.14 51%
1983 $30.91 $55.69 56%
1984 $36.58 $64.71 57%
1985 $33.52 $58.04 58%
1986 $39.51 $61.44 64%
1987 $51.43 $77.63 66%
1988 $57.86 $88.12 66%
1989 $58.67 $88.38 66%
1990 $60.29 $91.50 66%
1991 $50.21 $81.88 61%
1992 $49.35 $83.30 59%
1993 $52.04 $88.22 59%
1994 $58.11 $95.29 61%
1995 $59.95 $97.86 61%
1996 $59.11 $100.50 59%
1997 $59.79 $103.29 58%
1998 $50.37 $88.53 57%
1999 $48.36 $81.92 59%
2000 $58.74 $88.09 67%
2001 $57.68 $94.16 61%
2002 $55.40 $91.71 60%
2003 $57.02 $101.23 56%
2004 $56.25 $92.56 61%
2005 $53.83 $89.73 60%
2006 $58.64 $92.70 63%
2007 $64.62 $106.42 61%
Byproducts - Including hides, variety meats, tallow and numerous other products account for more than 10% of the value of a steer. Use of byproducts keeps beef prices to consumers lower than they otherwise would be. Hides are the single most valuable byproduct. Hide export opportunities were limited through much of 1998 due to the currency crisis in Asia.
Source: USDA - Livestock Marketing Information Center