Bacon and ham will cost more next year, and you need only walk into Bill Fugate's pathetic cornfields here to see why.
There are stalks and leaves but next to no corn because of the heat wave and virtually no rain in July and August. Cornfields that yielded 150 bushels an acre last year may produce 35 this year if Fugate is lucky.
The drought of 1983, shaping up as the worst in 50 years, has stunted crops all across the eastern two-thirds of the country. The corn and soybeans so vital to fattening hogs, cattle and poultry have been decimated by the heat; feed costs are skyrocketing.
The extent of the disaster will become clearer Monday, when the Department of Agriculture releases its new crop forecast. Last month's report, including only drought damage found in July, said the corn crop would be down 38 percent and the soybean crop down 19 percent from 1982's record highs. Sharper cuts are expected in the new report, which will include data collected through August.
There's a double-edged irony to this. For a while, it will mean more meat and probably lower prices in the supermarket: good news for consumers, bad for farmers. Next year that will reverse; there will be less meat and probably higher prices: bad news for consumers, moderately good news for farmers.
Meat industry experts and the USDA see a flood of pork and beef going to market this fall, as feed-short farmers and ranchers reduce their herds. Then prices will go up, reflecting farmers' higher costs and smaller herds.
But the USDA still says that meat supplies will be only 1 to 2 percent lower next year and that the drought suggests only an extra 1 percent on top of the expected 4- to 5-percent increase in consumer prices.
Nowhere is the summer's toll more graphic than on the rolling black prairie around the farm that Fugate and Ray Hankes, his brother-in-law, operate here in Livingston County. They call it Thrushwood Farms, but in reality it is a self-sustaining outdoor meat factory that sends 100 hogs to market each week while 100 more piglets are farrowed.
The factory, however, is running out of raw material.
Acre after acre of corn at Thrushwood Farms has no ears because of the heat. In other fields, ears are stunted or infected with mold. The soybeans are doing somewhat better, but they are infested with leaf-chomping woolly bear caterpillars and bean-eating crickets.
This means that sooner or later, most likely in the second half of 1984, the hogs that leave Thrushwood Farms will cost more because the corn and soybeans that feed them cost more. The grain that Fugate and Hankes can't grow must come from the open market, where drought-driven prices are rising fast.
"We're going to run out of feed in February, given the yields we now expect," Hankes said. "Then we will have to buy corn that we thought we would raise. The choices for a hog producer are to liquidate part of his stock or go to the bank for a loan."
"We will come up 32,000 bushels short and we'll have to make it up somehow," Fugate added. "Part of the problem is that we've never felt we purchased corn that was as good as our own. Outside corn has caused more abortions, less weight gain. We'd very much like not to buy corn, but we don't have a choice this year."
All of that precision and down-to-the-bushel calculation is standard stuff at the Fugate-Hankes pork factory. Every farming move and cost is factored into a computerized bookkeeping system that already has warned them that at best this will be a break-even year.
"Our costs for a 220-pound pig will be $85--and that's just what it will bring at today's market prices," Fugate said. "With corn going to $3.50 and $3.75 a bushel and protein meal being made from $9-a-bushel beans, you cannot come out with a profit on hogs at present prices."
If pork production drops next year and prices head up again, as the experts project, Thrushwood Farms may do better because it is geared to a constant output of about 100 hogs a week. Its operators intend to maintain that output even with the higher feed costs.
Fugate and Hankes breed their hogs then feed them with their usually high-yielding corn (380 acres planted this year) and soybeans (150 acres). When the animal reaches the 220-pound range it is sent to market to eventually be converted into the chops, ham, sausage and bacon that feed America.
In the good years--and 1982 was one of the best--hog farming is an exceptionally profitable venture. Thrushwood's balance sheets show that the farm made 24 cents profit on every pound of pork that left the farm. That came out to roughly $275,000 profit.
One reason for that profitability was that the massive overproduction of corn and soybeans pushed feed prices way down, making hog-farming attractive. Another was that prices hit around $60 per hundredweight--a figure that few farmers, including Fugate, profess to understand.
With that kind of money to be made, more farmers rushed into the hog business. Pork this summer is selling in the $40 range.
"We have neighbors who never had hogs who now are feeding pigs. I can't condemn them," Fugate said, "because farmers always try to maximize their income. But bankers aren't as willing to write farmers into the hog business as they were three years ago."
The point of all that is that hog-farming, much like cattle-raising, is an exceedingly cyclical business. The good years like 1982 must provide a cushion for the bad years, which 1980 and 1981 were for Thrushwood Farms, when the operation didn't turn a profit.
Hankes and his brother-in-law say they can live with that roller coaster, but they chafe at retailers who take advantage of it.
"With these lower hog prices," Hankes said, "retailers haven't lowered their prices as producers feel they should to encourage consumption. They have a nice margin as it is. We just feel that consumers have a difficult time with bacon prices going way up or way down as usually occurs."
But here in Livingston County, the future is now, and Fugate and Hankes are a tad nervous about where their hogs' next meal is coming from. They think well of Agriculture Secretary John R. Block, also an Illinois hog farmer, but they think he made a mistake last year in stopping a federal emergency feed program for budgetary reasons.
Hankes is trying to mount a lobbying effort to persuade Block to reinstate the program, which was designed to give federal aid to farmers who fell short of producing enough feed to sustain their stock. Legislators from the major livestock areas also are pressuring Block to reopen the program.
"If we don't have that program, it will mean more farmers liquidate their stock and it will mean higher meat prices for consumers . . . . Some assistance is justified, we feel," Hankes said.
"Livestock farmers felt the payment-in-kind (PIK) program was for grain farmers. Now we are feeling both the effect of the drought and the PIK program, which have increased the prices of the grain we need."
Bill Fugate nodded his head in agreement, but he indicated he's not holding his breath over help from Washington. "I'm not one to be too hyper," he said. "I'm thankful for our good years, and I think I can weather this one."
He said it as he led a visitor out of a 70-acre field of corn that looked, at least from the road, to be moderately healthy. In a 20-minute search, the field yielded one ear of corn, and it was a runt.