Forecast for ag products favorable
Georgia farmers are staring at record prices this year for the crops they grow. But high crop prices aren't good for all, particularly for those who raise animals, said a University of Georgia economist.
"Prices will improve or remain at the relatively high, or in some cases, record highs in 2011. But prices will be highly variable and input costs higher, significantly higher for some animal producers like poultry," said John McKissick, an economist with the UGA College of Agricultural and Environmental Sciences at the 2011 Georgia Ag Forecast in Gainesville Jan. 24.
The U.S. economy continues to impact consumer decisions. Unemployment will stay around 9.5 percent for the next year. "Consumers purchase based on current and projected income, and right now, we are forecasting little growth in total employment," McKissick said.
Georgia has a vast array of agricultural products totaling $11.3 billion annually at the farm level. Agriculture is the state's largest industry with a $68.8 billion impact and accounts for 383,000 jobs.
Row crops, such as cotton, peanut, corn and soybean are at record-high prices. Due to Georgia's climate and soils, farmers here can grow many different crops. Farmers will have to find the right mix to take full advantage of the bullish prices. For 2011, growing cotton looks to bring the highest economic return. The higher cotton prices combined with the tight supplies of other crops has caused competition for farmers' acres, meaning buyers of all row crops are trying to entice farmers.
Feed grains and corn are the most widely grown crops in the U.S. Despite high stockpiles, supplies for corn remain tight because of its use for fuel production. In 2000, six percent of the corn crop went to fuel. Last year, 37 percent of the national corn crop went into fuel; only slightly more, 39 percent was used to feed animals.
Input costs, or what it costs farmers to grow their crops, are expected to rise. Fertilizer, for example, will cost five percent more. Fuel prices will continue to climb, too, along with seed costs.
Beef prices improved in 2010, due to increases in demand. Declining supplies and improved demand should keep cattle prices high in 2011, too. But feed grain for livestock and poultry will be in high demand and cost more, estimated to rise by as much as 12 percent in 2011.
"Meat prices will remain high, but inputs will eat up returns," he said. "There will be thin profit margins."
The prices poultry producers earn will be close to last year's prices unless production is cut. Egg producers face higher input costs, which will impact the profit margin.
Dairy prices will remain high in 2011, but aren't expected to reach the record highs of 2007 and 2008.
The weak U.S. dollar is helping farmers who export products to other countries, particularly cotton and meat. But, expensive imported inputs are making the products more expensive to produce. Georgia leads the country in pecan production, and China's newfound demand for the nut has sent prices soaring at the farm level.
Growth in the green industry is directly connected to the economy. As the economy betters, so will profits for the green and ornamental industry.