Drought that is spreading across the country is increasing feed prices and quickly spelling financial disaster for livestock producers, Purdue Extension agricultural economist Chris Hurt says.

While crop producers face serious economic losses from reduced or non-existent yields, the lack of corn, soybean and hay crops could make the fallout even worse for milk, beef, pork, mutton, chicken, egg, turkey and duck producers.

"The first thought is crop producers will bear the brunt of the financial losses, but losses in animal industries will be enormous over the next year — perhaps considerably greater than for the crop sector," Hurt said.

Unlike many crop farmers, livestock producers don't typically have any form of income protection comparable to crop insurance.

December 2012 corn futures already have risen by nearly 55 percent, and soybean meal futures are up 24 percent.

"These higher feed prices have to be absorbed by the animal industry, causing a collapse in financial margins," Hurt said. "Higher feed costs cannot be passed on to the consumer in the short-run, so animal industries have to take these losses or begin to liquidate animals."

The lack of profitability is likely to cause some livestock producers to begin liquidation immediately, with Hurt predicting even more liquidation in the fall.