Corn Prices Force Production Cuts
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Updated: 4:49 PM Jul 16, 2008
Corn Prices Force Production Cuts
Rising feed prices have one local company planning to scale back production by 25 percent by the end of the year.
Posted: 10:30 PM Jul 15, 2008
Reporter: Michael Hyland
Email Address: mhyland@whsv.com
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The skyrocketing price of corn has poultry businesses scaling back. The Virginia Poultry Growers Cooperative has announced it expects to cut production by 25 percent by the end of the year.

The cooperative is linking the rising price of feed to the nation's policy on ethanol production. Local farmers say the costs are jeopardizing their lifestyle.

Poultry farmer Linwood Vrolijk, a member of the cooperative, owns five buildings that contain about 18,000 turkeys. The cooperative recently announced growers like him will be supplying fewer turkeys to the cooperative's processing plant.

"It's a third of our income," says Vrolijk. "So, we're just trying to do things as a business that keeps us profitable and helps us weather this storm until we can get things turned."

Cooperative President & General Manager James Mason says there's a correlation between the rising price of corn and the nation's ethanol policy.

"It would be a lot less damaging to the growers if we could go back to more normal placements," says Mason.

Late last year, the U.S. Congress passed a bill calling for more corn to be used to produce ethanol. According to the Department of Agriculture, about a third of corn in the country is used to produce ethanol.

"If you take any commodity and take 35 percent of it out of play, it means us guys got to pay a lot more money for what's left," says Mason.

Congressman Bob Goodlatte (R-VA) voted against the bill.

"And, we should let the market determine whether it goes to ethanol based on high gas prices or whether it goes to consumers, or whether it goes as feed for livestock," says Goodlatte.

As part of the bill, the government can lower the ethanol production mandate, and Texas Gov. Rick Perry is calling for the Environmental Protection Agency to do that, possibly bringing some relief to farmers in the cooperative.

"It'll be felt from top to bottom," says Vrolijk. "But, you know, we've been resilient farmers in the Valley here, and we plan on staying that way."

The EPA is expected to respond by next week to the Texas governor's call to lower the ethanol mandate.

The cooperative isn't the only business affected recently. Pilgrim's Pride announced Tuesday it will be cutting more than 600 jobs in Arkansas and Texas. Officials say it's in response to the record-high feed costs.

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