9:17 AM
Art Hovey, Lincoln Journal Star | Posted: Sunday, April 13, 2008 12:00 am
Less than two years later, Segner is thankful for a 350,000-gallon manure pit and the money it"s saving him on the high cost of commercial fertilizer. If it weren"t for that, he would have lost big money on the 1,200 hogs he recently sent to the processing plant.
"Right now that"s what"s keeping the shed profitable," he said.
Counting hog waste as your budgeting friend says something about how expensive it has become to get the hogs themselves to market weight. And the news is not much better from the cattle-feeding venture Segner and his father teamed up on through the winter.
"You"re feeding all winter in the snow and mud, and you still owe the bank when you"re done," he said. "It makes it pretty disheartening."
Hefty financial losses for producers of red meat -- typically as much as $60 for a market hog and $200 or more for each steer leaving the feedlot -- stand in stark contrast to the profit potential for grain producers as planting season approaches.
People who raise corn and soybeans and sell their bushels to somebody else can"t wait to get the planter rolling. There"s a good chance those who have to buy high-priced corn and soybean meal to feed their critters are gasping, groaning and waiting desperately for some very bad times to go away.
When Segner put his new building into use, corn was at $1.97 a bushel.
"Now, if you do the cash market, it"s at $5.50, $5.60."
Larry Sitzman, executive director of the Nebraska Pork Producers, and Jeff Stolle, vice president of marketing for the Nebraska Cattlemen, aren"t mincing their words about the connection between red meat and red ink.
"Monumental, fantastic losses," Sitzman said. "And they continue to build."
Some parts of a lethal combination that includes more grain being diverted to either ethanol or exports, a big hog supply and a surge in imports of Canadian hogs might ease by fall, he said.
"My fears and my producers" fears are can they hang on that long?"
On the beef side, Stolle did some quick math that suggests the net effect on Nebraska cattle feeders could be adding up to $5 million a day, $25 million a week and $1.3 billion per year.
"We"ve been losing money for long enough now, it"s hard to remember the last time we made any money," he said.
The laugh that went with that bit of levity didn"t last long.
"Essentially what we"ve seen over the last six, eight months is somewhat of a perfect storm from a cattle-feeding perspective," Stolle said. "There were a good many cattle purchased last summer for delivery last fall when corn prices were in the area of $3.25, $3.75 a bushel.
"And as we"ve gone through the winter, not only have grain prices appreciated in very rapid fashion, but it"s also been a pretty stressful winter in terms of feeding conditions throughout Nebraska and the rest of the Midwest," Stolle said.
Add in the slowdown in the economy.
"And that"s dampened beef demand and perhaps meat demand in general at a time when there are quite generous amounts of not only beef, but also pork and poultry in the marketplace," he added.
It"s worth noting that, year in and year out, livestock accounts for a much larger share of cash receipts in Nebraska agriculture than grain.
In 2006, for example, livestock receipts totaled about $7.7 billion, third highest in the United States, according to the Nebraska Department of Agriculture. Crops accounted for about $4.4 billion.
That means that despite an unprecedented run-up in grain prices, trouble in the livestock sector can blow a big hole in agricultural prosperity.
Darrell Mark, a livestock marketing specialist at the University of Nebraska-Lincoln, would like to be able to point toward a quick recovery. He cannot.
"I expect things to continue to get worse before they get better for both cattle and hogs," Mark said.
"I think we"re going to see some of the smaller livestock feeders and the smaller livestock producers leaving the business," he said.
Paul Segner and wife, Deb, have boys ages 14, 11 and 8, and they"re counting on conditions improving. In fact, they"re counting on it so much, they"re planning to put up a second confinement unit with the same 1,200-head capacity.
"If corn settles and hog numbers start to dwindle, prices will start to come up," Paul Segner said.
He realizes the portion of the corn price attributable to ethanol production is not likely to get any smaller.
"I"m not against the ethanol plants," he said, "but I am against everything that"s transpired in how they built them at such a breakneck pace."
At a time when land prices have also been on a rocket ride, the Segners looked to hogs as a way to boost their income and make room for one or more of their sons in the farming operation without taking on massive land debt.
"We just hope things turn around here," Paul Segner said.