National Review Online: The Corn That Broke the Cattleman’s Back

August 20, 2013

Jillian Kay Melchior, August 19 – The number of American feedlots leaving the business increased by 9,900 percent in the last year — a mass exodus prompted by the rising cost of feed.

The catastrophically high price of corn has been attributed largely to last year’s severe drought, which was certainly a factor. But the man-made — or rather Washington-made — causes often get short shrift, though they contribute significantly to the growing cost of feed.

Feedlots have two main inputs: corn and livestock. Take beef: Ranchers raise calves then pass them on to the feedlots, where they are “grown.” The Department of Agriculture reports that “corn is the primary feed grain in the United States, accounting for more than 90 percent of total feed grain production and use” for animals. From the feedlot, the cattle go to the slaughterhouse, then to the grocery-store aisle and finally to the steakhouse or your kitchen table.

These feedlot owners have preciously small operating margins, and the price of corn can make the difference between their making a profit and suffering a loss. For the past couple of years, it’s been looking grim.

The price of corn broke record highs last year. It has since decreased, but the highs nonetheless had a severe economic impact: A staggering 2,000 feedlots ceased to operate in the past year, compared with only 20 that had closed the previous year, the Wall Street Journal reported earlier this month.