For the first time in 5 years, Matt Balliett raised the price of the beef he produces on his farm.
But he’s still making less money than last year.
Despite decent returns for animals raised for wholesale or custom butchering, livestock producers such as Balliett are watching their profit margins shrink due to extraordinarily high input costs.
As Balliett, who owns Long Hollow Cattle Company in Drums, Luzerne County, raises his prices in an attempt to keep pace with the rising cost of doing business, he fears a daunting outcome is looming on the agricultural landscape.
“I can’t lose money, so we either have to stop what we’re doing at some point, or keep raising prices, and our consumers can only tolerate that for so long,” he said, adding the cost to get his beef processed to sell has gone up by 35%.
The cause of the financial instability is the current boom in the grain market. The price that farmers are paid for corn and soybeans in Pennsylvania has nearly doubled since 2020. As of May 18, corn was valued at nearly $7 per bushel, compared to $3.85 last year. Soybeans were soaring even higher, averaging $15.71 per bushel compared to $8.13 last year.
While the current grain market appears lucrative on the surface, the trend isn’t reflected in the profit margin for farmers.
As the grain prices climb, so does the cost for everything else.
Brian Dana, a hog farmer in Tunkhannock, cut the number of sows he keeps on his farm in half due to soaring feed prices. When grain prices spike, he said, the cost of feed jumps as well.
In return, Dana had to double and triple the price he charges for custom butchered pork and young pigs that he sells to young people for 4-H projects.
In an effort to stem the rising cost, Dana recently purchased a grinder so he can transform grain into feed right on his farm.
“I got tired of writing checks for big feed bills,” Dana said. “The grinder was an expense, but in order to stay in business you have to pay the price.”
He noticed feed prices creeping up in early spring, and as summer approaches the trend hasn’t stopped. Dana has persevered through input cost increases before, and he survived by cutting back on his animal numbers and then building back up when prices stabilized.
“We’ve done it before, but I never saw prices spike as bad as this,” Dana said.
Even farmers who grow their own feed aren’t immune to the inflated costs.
Ben Smith, who owns Smi-L-Acres farm in Hollenback Township, Luzerne County, produces all of the hay and corn silage used to feed his beef cattle and the replacement dairy heifers he raises for a nearby dairy farm.
Still, Smith does purchase grain to supplement the feed ration for the cattle, and it’s shrinking his bottom line.
“We see it from both sides here, with dairy and beef,” Smith said. “It’s costing more to feed these animals, and with milk prices not very high the dairy farmer can only pay us so much to raise his heifers. And with the beef that we raise for custom butchering, it’s going to get to the point where it’s cheaper for people to buy it in the grocery store.”
Not only are feed prices up, Smith added, but so is the cost of the plastic used to store commodities like hay and silage.
“You try to be conservative with things, but we’re spending more money everywhere – plastic, feed, fuel – and a lot of it is triggered by high grain prices,” he said.
Balliett agreed, and said even though he grows his own crops to feed his cows, it does little to help his profit margin when input costs continue to climb with no end in sight.
All of the materials needed to plant crops – fuel, seed and fertilizer – have increased drastically in price.
Fertilizer alone, Balliett said, is pushing $600/ton, almost double what he paid last year.
“When the input cost to grow grain goes through the roof, it impacts everything,” Balliett said.
So far, the rising costs for custom butchered beef and pork right from the farm hasn’t lessened the demand from consumers.
Dana said there are plenty of buyers for the pork produced at his farm, and he purchases young pigs at auctions to raise and fulfill the demand.
But it’s not cheap.
According to data from the U.S. Department of Agriculture, a 40-pound feeder pig was bringing an average of nearly $50 at auction during May. By the time the animal is ready to butcher at 250 pounds, the overhead cost to the farmer is even higher when feed input is considered.
“It’s crazy right now,” Dana said. “Feed costs are high and animals are bringing more at the auctions. It’s getting harder to produce the fresh pork that consumers want.”
As far as a solution, Balliett can only recommend that farmers postpone any major projects or expansion and wait things out. He postponed moving ahead with construction of a new beef barn to expand his business, and hopes consumers will remain understanding as farmers have little choice but to raise prices for the beef and pork they sell direct.
“We can’t continue to absorb the increases without raising our costs. The rise in our input costs is hitting us from all sides at the worst possible time of the year,” Balliett said. “I really think we’re just seeing the front side of the wave here, and it’s already a sad state of affairs. I hope people think about where this is going.”