Livestock feeders face cost squeeze

Rising demand for biofuels, particularly corn-based ethanol, will put a pinch on Nevada's cattle industry next year. On the other hand the price of alfalfa, the state's No. 1 crop, will remain relatively stable.

Nevada ranchers who fatten calves will suffer in 2007 from rising corn prices, says Marty Owens of the U.S. Department of Agriculture's National Agricultural Statistical Service. Corn prices in November stood at $3.12 per bushel, up $1.35 from a year earlier.

"Cattle feeders don't have that much margin to work with, and the American public has a limit as to what they will pay for steaks," Owens says. "We have had very good prices the last few years, and it is normal to have a modest correction much as you see in the housing market."

Alfalfa growers, meanwhile, will see continued strong markets.

According to the USDA, hay in November sold for $106 per ton, up $14.30 from a year earlier.

Owens says the state's alfalfa farmers will continue to enjoy high prices as more farmers take land out of hay for other uses and because of continued growth in demand from the dairy industry.

"The hay grown here in Nevada is of a high quality, which is needed by dairymen for their cows," he says. "Nevada has a high protein content in its hays, so cows have a higher yield of milk."

Owens says high fuel prices will continue to plague the agricultural sector as farmers use energy in everything from tractors to water wells.

Tom Harris, director of the University of Nevada, Reno, Center for Economic Develop-ment, notes that macroeconomic factors also benefit the state's farmers and ranchers.

"The dollar has been falling, and that makes our exports more competitive," he says. "We may see more exports because we are more favorable in the dollar exchange, and the cattle and alfalfa industries in the state of Nevada do lot of exports."