Harry Siemens – As we come to the end of this year, several thoughts come to mind. The first is how things have changed for the main sectors in agriculture: Grain and special crops and the cattle and hog industries. Twelve months ago, the grains industry was wondering what 2007 would be like prices wise, having just come off an excellent crop year following two poor ones.

Then the energy and renewable fuel hype and increased demand started to move the markets. So far at least, its proving to keep the demand strong and the prices relatively high. How long is any one’s guess, but those who are so inclined, can even lock in a profit on their 2008 crops, but often its those who know how to do it right that will actually do it on all their production.

Even a year ago, the cattle and hog industries weren’t rolling in the money, the hopes remained high, especially for the cattle producers anticipating the opening of the border to older cattle moving into the United States.

The dollar exchange and climbing feed prices whacked both the cattle and hog producers pretty hard. But it seems it’s the demand and hype from the renewable fuel business that is hurting the most. We have grain producers saying its about time the livestock producers paid more for feed, but when hit with the double whammy of the exchange, the hurt is devastating.

Even USA President George Bush gave livestock producers some hope — During a media briefing, President George W. Bush said the emphasis on corn-based ethanol will be reduced in the future. “We can’t rely only on corn to meet these standards (in the energy bill). I understand that many people in the farm-belt are getting concerned, unless, of course, you’re a corn grower. But if you’re feeding cattle or feeding hogs, the cost of business has gone up and that’s one of the trade offs you have to make.,” said Bush. “We’re spending a lot of taxpayers’ money to figure out how to use woodchips or switchgrass to make ethanol.”

The George Morris Centre suggests, if Canada follows the U.S. lead in encouraging aggressive ethanol development, the cost of feeding livestock in Canada compared to the U.S. will likely increase.

Research by the George Morris Centre indicates, when you compare feed ingredient costs during the first three quarters of 2007 to the average price of those same ingredients from 2003 to 2006, the cost of feeding hogs has gone by about 10 dollars per pig. So, the ultimate realization will be for consumers to understand the price for food in North America will have to rise to pay for the increased production costs.