By Brad Haire
University of Georgia
“Commodity prices across the board will be favorable next year,” said Nathan Smith, an economist with UGA Cooperative Extension.
Smith and other economists with the UGA College of Agricultural and Environmental Sciences recently compiled an annual report to help Georgia farmers pick the most profitable crops to grow next year.
“We’re looking at a rare situation this coming year that will bring some good opportunities for farmers,” Smith said.
Corn prices skyrocketed this year to $4.50 or more per bushel, as much as double the price from a few years ago. The price increase came from a surge in U.S. demand for ethanol, an alternative fuel for gasoline. Corn is used to make ethanol. Corn prices this year will lower to $4 or less per bushel, Smith said. That’s still a good deal.
The demand for corn has forced the buyers of peanuts, wheat, soybeans and cotton to offer farmers more money to make sure they grow their crops, too, Smith said.
Peanuts are expected to sell for $500 per ton. That’s the highest price since 2001, the last year of the federal government’s peanut quota system, which guaranteed farmers $610 per ton.
Soybean and wheat prices next year will be the highest in a decade, he said. Soybeans that sold for $9 a bushel this year will likely sell for $10.50 a bushel in 2008. Wheat that sold for $5 a bushel will likely sell for $6 or more a bushel.
Cotton prices should be higher, too, said UGA Extension economist Don Shurley. Steady demand coupled with fewer planted acres this year will increase prices to around 70 cents per pound, or 10 cents higher than the same time last year.
Fuel and fertilizer will cost 30 percent more in 2008, Smith said. This will increase the cost of production for many farmers. Diesel, which farmers use to fuel tractors and irrigation systems, will cost $3 or more per gallon. This time last year, a gallon was closer to $2.25.
Due to the added cost, peanuts and wheat each will cost 10 percent more per acre to grow next year. Soybeans and corn each will cost 20 percent more per acre. It will cost 10 percent more per acre to grow cotton under irrigation.
Though things look good economically, Smith said, Georgia’s extended drought could put a damper on the party. The Southeast suffered under drought this summer, but many crops did surprisingly well. They may not do as well next summer if the drought continues.
“Next spring, we’ll likely be planting into a drought,” Smith said. “You can’t say whether we’ll get the rain needed to ensure good crops.”
The United States should have a new farm bill by springtime. Congress is in the process of passing one now. It will guide the country’s agricultural and environmental policies for the next five years, particularly those related to farm subsidies, conservation, rural development and nutrition. The current farm bill was passed in 2002.
When commodity prices are high, Shurley said, little thought is given to the farm economic safety net. But prices will not always be high like they are now. Things change and can often change quickly.
“It is important that the farm bill provide a safety net that is adequate to meet the needs of diversified agriculture like that found in Georgia,” Shurley said.
The proposed farm bill has some changes, but is very similar to the current bill, he said, which has been a good one for Southeastern farmers.