Published on 12/25/02

Farmers could see better prices in 2003

Georgia farmers should see better prices for what they produce next year, according to a University of Georgia study.

The 2003 Farm Outlook and Planning Guide, published by the UGA College of Agricultural and Environmental Sciences, will be released in mid-January.

Cotton comeback?

Supply-and-demand seems to favor cotton farmers, said Don Shurley, a UGA cotton economist with the CAES agricultural and applied economics department.

In 2002, the world grew 87.4 million bales of cotton, or 11 percent fewer than in 2001. A bale of cotton is 450 pounds of lint. Production declined in the major cotton-producing countries: China, India, Australia and the United States.

While the world supply is lower, the demand for cotton is expected to rise next year to about 96.4 million bales, up 2.4 percent from 2001.

"At this juncture, the 2003 cotton price outlook is encouraging," Shurley said.

Peanut marketing

UGA peanut economist Nathan Smith said Georgia farmers' 2003 peanut crop will be their second under the new farm bill, which ended the way they had long marketed their peanuts. Under previous farm bills, the government had regulated the U.S. peanut supply through a quota system.

To get better-than-average prices in 2003, peanut growers will have to watch the market closely. Like cotton, peanut prices are now very susceptible to supply-and-demand. And right now, this isn't working in peanut farmers' favor.

The 2001 crop was the second-largest ever, creating an oversupply of peanuts going into 2002. To get rid of these extra peanuts, farmers need access to foreign markets or a huge increase in consumer demand.

The U.S. Department of Agriculture expects U.S. citizens to eat about 4.5 percent more peanuts this year. The industry view is that lower peanut prices will increase consumption.

Lower farm prices for peanuts could mean slightly lower prices for peanut butter and for candy and snacks containing peanuts. It may be more likely, though, that manufacturers will spend more on advertisements and promotions instead of lowering prices.

The 2002 U.S. peanut crop wasn't a good one. This drop in supply could mean higher prices for farmers in the future.

Lively stock

Livestock and poultry account for 51 percent of Georgia's total farm income. In 2002, there was a large supply of poultry and red meat. This suppressed farm prices. But domestic demand remained strong, and prices weren't as bad as they could have been.

In 2003, poultry growers can expect slightly higher prices, said John McKissick, a UGA livestock economist. But an oversupply of eggs will continue to hurt egg prices.

U.S. beef production is expected to total 25.95 billion pounds, down from 27 billion in 2002. This lower supply will increase prices for farmers. Beef demand is expected to remain strong.

Tobacco uncertain

The tobacco industry still faces uncertainty. Tobacco remains under a federal quota-based system. But changes in the industry and the mood in Washington toward quota-based farm policies point to a potential quota buyout.

Growers seem willing to give up the security of government price supports for greater freedom in deciding how much to grow and in selling directly to tobacco companies.

The 2003 flue-cured quota, announced Dec. 15, will be 526.4 million pounds, or 9.6 percent less than in 2002 and 40 percent less than in 1997.

With the lower production, most growers have gotten prices above the government support price. In 2002, 95 percent of Georgia tobacco was contracted directly with tobacco companies.

Agriculture is Georgia's No. 1 industry, generating $8.7 billion of the state's $400 billion annual economy. Including the businesses directly and indirectly affected, farming contributes $41 billion of state economy.

For a copy of the 2003 Georgia outlook guide, call your UGA Extension Service county office.

Curt Lacy is a livestock economist with the University of Georgia College of Agricultural and Environmental Sciences.

David Emory Stooksbury is associate professor of Biological and Agricultural Engineering at University of Georgia's College of Agricultural and Environmental Sciences.