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Posted: August 6, 2012 8:40 a.m.

Drought could take toll on Ga. poultry

Georgia, struggling with a drought of its own, also has to worry about earth-parched conditions in other states, particularly the Corn Belt states of the Midwest.

"Ninety-eight percent of our corn comes from the Midwest," said Emory Forrester, director of feed milling and feed delivery for Baldwin-based Fieldale Farms. "We don't get much Georgia corn because it's ... not grown that in-depth in Georgia."

Poultry has long been a major industry for the Hall County area and chicken feed is composed of 60 percent corn, 20 percent soy and 20 percent other ingredients, such as minerals, Forrester said.

Fieldale uses about 11,000 tons, or about 392,000 bushels, of corn per week, "and we're paying a high price for corn delivered in Baldwin, and this drought is only going to run it up to where it's going to be more expensive," he added.

The impact on consumers might come in the form of less chicken in stores rather than higher prices.

"If you go up on your price and the consumer walks away from it, then it backs up in the pipeline," Forrester said. "It's just a situation where supply and demand have got to get in line. And demand, if this drought keeps up, is going to be more than the supply."

Corn also is necessary to sustain livestock, and soybean crops also are taking a beating in the withering drought, industry officials have said.

The U.S. House on Thursday voted to revive expired disaster relief programs for cattle and sheep producers, just as lawmakers left for their five-week August recess.

The top Democrat on the House Agriculture Committee, Rep. Collin Peterson of Minnesota, said that while he would vote for the disaster relief measure, "This bill is a sad substitute for what is really needed, a long-term farm policy."

He said that while the legislation would help cattle and sheep farmers, "Dairy and specialty crop producers will be left hurting and there is no assistance for pork and poultry producers."

According to the latest U.S. Drought Monitor update, based on conditions as of Tuesday morning, the area of the lower 48 states experiencing extreme drought - the second-highest classification behind exceptional drought - rose nearly 2 percentage points from the previous week, to 22.3 percent.

Also, last week, nearly half of the nation's corn crop was rated poor to very poor, according to the U.S. Department of Agriculture's National Agricultural Statistics Service.

"What happens in the Corn Belt is very important to the poultry industry and livestock producers in general, and unfortunately the damage appears to already be done in terms of the potential yield of the crop," said Mike Giles, president of the Gainesville-based Georgia Poultry Federation.

"Each report that comes out from USDA is a little worse than the one before it."

Industry experts are especially looking toward a report coming out Friday "in which the first actual (corn) growers' survey will be included," Giles said. "The other reports are based on other evaluation tools they have."

Prices have jumped to $7.50 per bushel from $5 and forecasted prices are more than $8 a bushel, he said.

At the $7.50 cost, "you're talking about over $1 million a day in additional costs for Georgia poultry companies," Giles said.

Terry Barr, a nationally recognized economist at Colorado-based CoBank, which provides loans and other financial services to agribusinesses, said that "until you get a real good fix on this crop, these prices are going to stay very volatile.

He said he expects that with the release of Friday's report, the USDA is "going to make a significant reduction in their estimated yields and talk about a corn crop that's probably closer to 11 billion bushels than the 14 billion bushels they were (projecting) just a couple months ago."

The challenge for poultry and other industries is whether "they pass (higher) costs through the consumer," Barr said. "To the degree they can't, they've got to continue to make cutbacks in production.

"So, at this point and time, how high grain prices go is probably a function of how successful the protein side is in moving these increased costs through the consumer," Barr said.

"And this is a weak economy, so a lot of folks are not optimistic about how much more you can push these prices. Consumers are obviously being very conservative in their buying patterns."

The Associated Press contributed to this report.

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