Type: Economics
Pages: 3 | Words: 693
Reading Time: 3 Minutes

While researching on the grain and livestock product prices, I started by getting the current market prices of the individual products. This was done by checking on the various business journals on the current and previous prices. I then checked to see whether there was any relationship between the prices of grain and livestock products. Once I established a relation between the two which was inversely proportional, I embarked on getting to know why this was the case. While checking on the various reasons to explain these circumstances, I sought various opinions from business experts as well. This was important in that they understand the market trends for grain and livestock product prices even better. The use of price chart helped me see the general pattern of change in market prices over the recent few months and therefore enabled a comparison between the two prices whether there was a rise or a decline. The reports gave a speculative view of the situation by many stake holders in chain from producers of the products, middle men and the consumers.


Grain prices have been on the fall in the recent times, for instance wheat selling at the lowest price of seven dollars per bushel for the first time since January. There is a projected change in the future owing to the implementation of the American biofuels plan which will increase competition in grain consumption hence lead to price increment (Pruitt, 1984). Consequently, since livestock depend on grain too, the price of livestock prices will increase but not as much as that experienced by grain consumers.


The apparently continued declines in grain prices in the US markets have seen a tremendous increase in animal product consumption and hence increase in prices of animal and poultry products. This has pushed many companies and individuals in the grain trade to retreat from the market because of the biting losses incurred, leaving trade in livestock and poultry products as the only other alternative for consumers. However, there is some hope of decrease in the prices of animal and poultry products once there has been a boom harvest in Brazil (Appleby, 1982). Nevertheless, this doesn’t look like the best option, since the harvest in Brazil alone cannot be able to cater for the vast American population; bearing in mind that other countries will be interested in importing wheat and soya from Brazil. This is evident from the large number of ships already in Brazil waiting for the grain though it has not even been harvested. The competition becomes even stiffer because Argentina also has not had a good crop, hence need to stock its national stores through importation. The main cause of the current grain shortage in America has been blamed on the biting drought that has been experienced recently, hence not giving the requisite conducive environment for good agricultural (grain) production. Therefore, as a tentative solution to the grain crisis, the United States of America should consider alleviating the effects of the drought by putting more land under grain production through such programs as irrigation. Also, giving of financial incentives to willing farmers will go a long way in boosting the morale and encourage them to take part in agriculture without fear of great losses having been cautioned by the government incentive. There is a projection that grain prices will increase in the near future, with a possible decrease in animal product prices. This grain price increase is expected to result from the implementation of the American biofuel policy, expected to promote the use of ethanol as fuel given the current high prices in oil per barrel. This will translate into much of the grain produce being used in fermentation to provide the fuel, thus tremendously reducing the amount of grain in the market for human consumption. Therefore, the grain prices will go high, in accordance to the rules of demand and supply. The fact that animal production in the United States of America is dependent on grain means that it is no exception to the effects of the increasing demand for grain for biofuel production, but the effects might not be as great as those experienced by grain product consumers.

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