Published on 01/30/08

UGA experts predict volatile farming year

By Faith Peppers
University of Georgia

The perfect storm may hit Georgia agriculture this year. But it doesn’t promise to bring rain. Drought, high energy costs and a shaky U.S. economy could make for a trifecta of trouble.

“The current rate of change and uncertainty in agriculture is unprecedented,” said J. Scott Angle, dean and director of the University of Georgia College of Agricultural and Environmental Sciences. “Now more than ever, farmers must use the best predictive tools to plan for the coming season.”

That’s why CAES created its annual Georgia Ag Forecast sessions, which will take place at five locations across the state this week.

“The ag forecast (series) is designed to give farmers and others in agribusiness access to the best minds at UGA to assure that they have the most up-to-date information possible,” Angle said.

Water restrictions' impact

At the series’ first session in Rome, Ga., Jan. 28, Greg Clark, co-owner of Three Rivers Nurseries, said Georgia’s current drought has severely affected the state’s green industry, which is being "unfairly hurt" by statewide water conservation regulations.

“The economic impact the total outdoor watering ban has had on the green industry is like putting a knife across a major artery in the state’s economy,” Clark said. “All industries should share the burden to conserve water. It shouldn’t all be on us.”

The Georgia green industry normally boasts an annual total economic impact of $6 billion and employs more than 75,000 workers. The industry lost $3 billion in sales and 35,000 jobs last year.

Georgia landscapers and nurserymen may get some reprieve from the state’s new water plan, but just how much hasn’t been decided.

Drought and water are major concerns for all of agriculture. The shrinking value of the U.S. dollar and soaring energy costs are troubling, too, said John McKissick, a CAES economist.

Good with bad

Georgia’s agricultural outlook is “a tale of two cities,” he said. “The price outlook for all of agriculture is good. But the cost of production is going to be very high also. So whether the total profit picture is good depends on how high the input costs go.”

Despite drought and other economic challenges, Georgia’s farm gate value increased last year. Georgia soybean and wheat farmers got record high prices for their crops. Corn prices were near the record price.

“We have a lot of alternatives on the crop side,” McKissick said. “We will certainly see a big increase in soybean acreage this year because it’s a low-input crop with record high prices.”

Higher grain prices mean livestock and poultry farmers will pay more to feed their animals. This will increase their costs, he said.

Grain prices haven’t always been high in Georgia. They were low in the recent past, and farmers reduced production. Because of this, the state lost a lot of its infrastructure to store and handle grain. But that is changing.

“How long is this going to last? Are we back in the grain business?” McKissick said. “I think there is a fundamental shift afoot here.”

Global impact

National and international factors have led to the current economic situation, he said.

One factor is ethanol. Increased demand for corn to produce it has driven up the value of the crop. Buyers of other crops like soybeans, wheat and peanuts have also increased their prices to make sure farmers grow their crops, too.

The U.S. dollar is weak right now. That means foreign countries can buy U.S. crops for less money, which can be a good thing for the farm economy. “So even though we have record high prices here,” said McKissick, “they are still competitive for import in other countries.”

(Faith Peppers is a news editor for the University of Georgia College of Agricultural and Environmental Sciences.)

Faith Peppers is the director of public affairs with the University of Georgia College of Agricultural and Environmental Sciences.