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Drought: USDA throws livestock farmers a lifeline. Will it help?

With the drought sending corn and feed prices soaring, US livestock farmers are bracing for the worst. A $170 million USDA program announced Monday, they say, is too small to make a real difference.    

By Richard MertensContributor / August 13, 2012

President Barack Obama speaks at a campaign event on Sunday at the Bridgeport Art Center in Chicago. Starting a planned three-day swing on Monday through Iowa the president announced the federal aid for farmers.

Sitthixay Ditthavong/AP

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William Tentinger spent the morning giving shots and tending newborn piglets among 4,000 pigs on his Iowa farm. He also spent time wondering how much more the cost of feed will rise, and how many more pigs he’ll have to sell at a loss.

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With the current drought, “there’s just no way we’re going to make any money on hogs in the future,” he says.

In the face of this summer’s withering weather, the US Department of Agriculture Monday gave what farmers like Tentinger saw as a modest show of support, offering to buy up $170 million worth of meat products between now and Sept. 31.

IN PICTURES: Drought in the USA

Livestock farmers have been squeezed hard this year, forced to pay dramatically higher prices for feed, which consumes much of the American corn crop. Prices for meat have risen, too, but not as fast as the cost of feed.

The USDA says the buy-up will help support the price of meat even as farmers who raise hogs, chicken, sheep, and even catfish, cut back their flocks, herds, and stocks to save money on feed. The meat will go to government food programs, such as school lunches and food banks.

The program excludes farmers who raise beef cattle. Although they, too, have been selling off animals to reduce costs, the USDA says the selling off will likely end soon. 

Most of the money, $100 million, will go to the nation’s hog farmers to buy up pork, though the money is unlikely to have a large effect. Annual pork sales, according to the USDA, are $97 billion.

“We’re very appreciative of it,” says Mr. Tentinger, who farms in Le Mars, Iowa, near the Nebraska border, and is president of the Iowa Pork Producers Association.

The money could help buoy pork prices somewhat: “It’s a little relief in the short run,” he says. 

Other industries had much the same reaction. Up to $50 million will go to helping the poultry industry, which John Starkey, president of the US Poultry & Egg Association, says will help struggling producers.

But US poultry farmers produce an average of 50.4 billion pounds of chicken meat annually, which means that the $50 million was “not a lot,” a spokesman for the association says.

Livestock farmers are likely to continue struggling as long as feed costs remain high. Tentinger says the cost of feed for his hogs has risen 30 to 40 percent since the drought began in June.

The price of catfish feed, says Roger Barlow, executive vice president of Catfish Farmers of America, has risen as much as 65 percent. Catfish feed includes corn, soybeans, and other supplements.

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