Things are really different than they were 45 days ago. We had a really good year for exports going until this economic meltdown started. The pork industry was enjoying the 17^th year in a row of larger exports. That is a record that any country would like to have under their belt. But if things don’t change it might be the end to such a good record. As of a month ago one out of four hogs produced in the US was being exported. Can you imagine how many bushels that we exported through those hogs? That is why we have been working so hard to export more meat products. It not only helps the livestock producer but it really helps the feed producer through the purchases of that grain and hay.  

The cattle numbers for export have been way up, too. We are shipping more product out of the country than ever before. However, total cattle numbers are at a low right now and so we are having trouble meeting all of our orders for the right product. One problem is at our feed yards and packing plants. There simply are not enough calves to fill our lots right now. The main reason is the prolonged drought that has hit a large part of our country the last few years. A lot of cows then went to market because of high feed prices.  But now, packers are only processing cattle 34 to 35 hours a week at the plants. There is more packing capacity than we have cattle. It is just a matter of time until we see another plant closing.  I hope that we are able to keep our plants here in Kansas going. 

So, what has the economic meltdown done to the livestock industry? Well, it really brought down grain prices and thus lowered the price of the feed inputs. That is good for the livestock producer but bad for the grain farmers. It will finally let the hog producers get closer to making money, or will it?  

If you think that we will make a lot of money in the livestock business you have another idea than I do. For some reason our dollar is strengthening against every major currency save the Japanese yen. Some of the currencies have fallen as much as 40% against the dollar.. So what does that have to do with us? 

First, we are losing exports at a alarming rate because the foreign countries aren’t able to pay for them. We have product on the water right now sitting in ports around the world with no buyer. What has happened is that most US companies demand 20% down when they ship meat overseas. But in today’s world the importers are forfeiting that deposit because their currency is down 40% and more.

It is cheaper for them to lose the 20% down than to pay for the product. This is really playing havoc with our exporters and packers. The packers are all scrambling right now to do as much as they can to collect and get rid of all that product. Our competitors now have a cheaper rate for their products because of lower currency levels.  That takes US customers away. 

So what’s the next step? USMEF is doing everything it can to try to get our exports flowing again, including meetings with as many countries as possible.  It is also working with USDA to make sure it is doing everything it can to help get our markets moving again.  Add a new administration, and we have our work cut out for us.  

Keith Miller
USMEF Vice President
KFB board member

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