Storing higher levels of corn can pay off in long run

Storing higher levels of corn can pay off in long run

Grain inventory will be good to have in case of another drought, economist Paul Aho says

The drought-free period from 1988 to 2012 was good for the poultry industry because there were healthy harvests of feed corn. But it also had its consequences, Poultry Perspective economist Paul Aho said June 24 at the USPOULTRY Financial Management Seminar.

That period of high corn production also lulled poultry producers into feeling of complacency, which was dangerous to the industry.

“Yields were rising. No droughts were happening, so what could possibly go wrong,” he said, noting that producers did not see any reason to have extra corn “hanging around not earning anything.”

“We thought we didn’t need it, until we did need it,” said Aho.

Over the course of the last three years, record-high corn prices have emerged and the poultry industry has suffered.

And even though Aho said corn supplies appear to be rebounding in 2013 and the drought is over, he advised that the U.S. poultry industry learn from its mistakes.

“I think there’s a lesson to learn here about storing grain and having access to grain,” Aho said. “The Chinese are famous for storing grain. We sometimes criticize them for storing too much grain, but they have 5,000 years of history and they remember certain things about history. Storing grain is probably a good idea. It’s mentioned in the Bible and a lot of thoughtful people have mentioned it over the years.”