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Georgia Ag Forecast: 2021 offers opportunity for ‘rural to shine’

By for CAES News

The pandemic has put a strain on all sectors of the economy, and the agricultural and food industries were no exception. From supply chain disruptions that led to dumping milk and crops to increased consumer demand for plants, there were many ups and downs in 2020 markets.

University of Georgia agricultural economists recapped the unique year and prognostications for 2021 through the Georgia Ag Forecast seminar presented via webinar Jan. 29 and the annual report available online.

Dual studies track agritourism, COVID-19 effects on producers

Since 2014, the agritourism farm gate value has grown more than 40% in Georgia, and a recent survey conducted by College of Agricultural and Environmental Sciences faculty shows that about 6 out of 10 motivated travelers seek rural or small towns when selecting a destination for a leisure trip.

“I don’t see a better time ever, in my personal history, where rural and agritourism has the chance to showcase itself,” said John Salazar, associate professor and coordinator of the college’s Hospitality and Food Industry Management Program. “Rural communities have to be more marketing savvy, and agribusinesses have to collaborate with their local destination marketers. There’s no better scenario than for rural to shine.”

Agritourism activities may include festivals, farm tours, U-pick operations, horseback riding, farmers markets, farm vacations, wineries, picnic areas, biking and hiking trails, and special events including weddings and related educational programs.

“The urban markets have taken a big hit. People want to travel, and there’s still a portion of people that have money to travel, but they don’t want to go to places where they don’t feel safe. These activities really do align themselves well with social distancing.”

Greater spring and summer travel is anticipated compared to 2020; April and May were the two top months of planned travel in Georgia for survey respondents, with June and July following.

“There’s an association between rural and agritourism activities. People are looking for agritourism and that small-town experience,” Salazar said. “The hospitality opportunity in these rural communities has an elevated platform that it never had before. There was almost twice the hotel occupancy decline in the urban market compared to rural.”

Agritourism could be a solution to mitigate low prices and the lack of market opportunity for some producers. About three-quarters of farmers surveyed by CAES agricultural economists say that they have financial concerns. Polls were conducted in May and December 2020 to gauge a number of factors including revenue, financial assistance and health.

“The situation is so evolving we wanted to look back through the retrospective survey on the year,” said Sharon Kane, senior public service associate for the UGA Center for Agribusiness and Economic Development. “This is an ongoing, dynamic situation, and these are glimpses into what’s been going on.”

On average, farmers surveyed who applied for financial assistance expect that about 20% of losses have been or will be covered by relief programs. The Payroll Protection Plan (PPP) was the top relief program reported in both surveys. A number of respondents said that they were not participating in any program.

Of all commodities, livestock was the most affected in the spring and year-end surveys. The top issues across all commodities were low prices and lack of markets in both surveys. As the year went on, more respondents were concerned about the health and emotional impacts of the pandemic.

Commodity outlooks

Poultry, peanuts and the green industry were up in 2020. Recovery for other sectors depends on multiple factors, including the pandemic, trade and weather. The following is an overview of the 2021 Georgia Ag Forecast report authored by Department of Agricultural and Applied Economics faculty.

Poultry, livestock and dairy

Despite production disruptions, 2020 broiler production is expected to be 2% greater than 2019 and aggregate prices rose about 10%, according to Todd E. Southerland, senior vice president for food and agribusiness at Truist Bank, and prices could remain higher this year.

“Consumers should expect an inflationary price environment for food over the coming years. The ‘long tail’ analysis of COVID-19 includes the likelihood of lasting impacts on the food industry, such as enhanced food-safety protocols and employee safeguards, all of which come at a price,” Southerland reports.

Beef cattle prices are expected to rise as production trends down and liquidation continues. Demand is expected to increase as the economy recovers. Pork production will likely have slow growth this year, but feed prices could impact profit for producers even though export demand is expected to remain strong in the short term. Milk production is expected to expand, but low milk prices and higher feed costs will hamper profit margins.

Row crops

Cotton acreage and production in Georgia were lower in 2020, from 1.4 million planted acres in 2019 to 1.2 million. As discretionary items, cotton products follow global economic trends and recovery will depend on multiple factors.

Partly due to lower cotton prices and higher yields, 2020 was a notable year for peanuts with a fourth-highest record 1.64 million tons for Georgia. Consumer sales of peanut butter, peanuts in candy and snack peanuts were up, and this trend is expected to continue this year. Global demand for corn, wheat and soybeans will remain strong in 2021.

Fruits, vegetables and tree nuts

Reduced exports and consumer reactions to COVID-19 were blamed for 2020’s decreased consumer price index for fresh fruits. Pecan production is expected to be higher this year after two decreased years from the impact of Hurricane Michael. Blueberry imports have increased eightfold from 2005 to 2018, causing serious economic injury to domestic growers in recent years. An opportunity for blueberry exporters lies with new trade with China, which was allowed last year. Vegetable prices are expected to be strong in 2021. The total harvested area was down 7.7% in 2019 compared to the year before and is expected to be lower in 2021.

Horticultural industry

With housing starts and consumers stuck at home, 2020 was a bumper year for the green industry — businesses associated with ornamental plants; landscape and garden supplies; and nursery, greenhouse and sod growers — but the coming year is expected to be comparable to 2019 levels. Plant sales were up about 2% last year, with more consumers purchasing online than before.

Forestry 

Pulpwood was adversely affected by the pandemic with reduced demand for printing and writing papers, down about 13% across the South. Conversely, softwood lumber has increased across the area over the last decade and is expected to hit 25 billion board feet in 2021. The Forestry report was provided by Forisk Consulting and UGA's Warnell School of Forestry and Natural Resources.

 

To view the recordings and the complete 2021 Georgia Ag Forecast report, visit agforecast.caes.uga.edu. The seminar is sponsored by Farm Credit Associations of Georgia, Georgia Farm Bureau, Georgia Agribusiness Council, Georgia Department of Agriculture and Georgia Grown.

Josh Paine is a marketing specialist with the University of Georgia College of Agricultural and Environmental Sciences.
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