Ag Forecast Series: Opportunities, challenges ahead for farmers
Jay Stone, Georgia Farm Bureau
The overall takeaway from the 2018 Georgia Ag Forecast series is that the state’s economic outlook for farmers presents a mixed bag. University of Georgia College of Agricultural & Environmental Sciences economists expect rising prices for some farm commodities, declines in others. And the national political landscape leaves funding for farm programs – both in the short term and the long term – in limbo.
“There is a lot of good news out there,” said UGA Center for Agribusiness & Economic Development Director Kent Wolfe during the Feb. 5 installment at Georgia Farm Bureau in Macon. “Unemployment is down. Wages are growing. There is increasing per capita income, and the consumer segment of our economy really drives the economy as a whole going forward.”
Wolfe, who presented the forecast for livestock producers, said consumers are buying more beef, pork and broilers, but more is available.
“We’re going to see an increase of protein on the market of about 3.8 percent,” Wolfe said. “When we think about supplies going up like that, it’s going to have a negative, or downward pressure on the price of those commodities. We are looking forward to continued domestic consumption growth and exports are expected to continue as well, but we need to make sure that our production doesn’t outstrip our demand, or we’ll see prices stall.”
Wolfe said demand for dairy products is declining, and with growing production could result in declining prices received by dairymen.
UGA Extension Economist Don Shurley presented the outlook for field crops Notably, the 2017 cotton crop ended up better than expected after hurricanes ravaged key cotton-producing states, including Georgia. Exports are growing, and China is approaching the point at which the difference between what it produces and what its textile manufacturers need dictates either an increase in that country’s cotton acreage or relaxing its cap on imported cotton.
“When that happens, if we have a good crop here and have good available supply, we’ll be able to meet that demand,” Shurley said.
Shurley also discussed a developing situation with federal farm programs, specifically the ramifications of cotton provisions in the Supplemental Disaster Assistance bill the U.S. House passed in December. The bill includes a provision that would allow seed cotton (harvested cotton that has yet to be ginned) to be a covered commodity and eligible for farm bill commodity support programs effective for the 2018 crop.
The measure is intended to provide short-term relief for cotton farmers, who have struggled with long-term low lint prices. As proposed, the bill would require farmers to convert generic base acres, which are pre-2014 farm bill cotton base acres, to exclusively seed cotton base or a combination of seed cotton and other crop base depending on a farm’s planting history. Under the 2014 farm bill, famers were given the flexibility to plant other covered commodities, like peanuts, on generic base acres. If the disaster bill ends up being signed into law, farmers will have less flexibility and will need to decide which of the two options will work best the 2018 crop year.
“If we do away with generic base, there will be no more of that,” Shurley said. “So farmers will be back to planting for just the market. You’re not going to go out and plant thinking you’re going to get an ARC (Agricultural Risk Coverage) or PLC (Price Loss Coverage) payment on those acres, because you won’t.”
The Supplemental Disaster Assistance is waiting consideration in the Senate. If that continues much longer, Shurley said, it could leave farmers to make planting decisions without knowing whether it passed, and not knowing how they should use acreage designated as generic base under the 2014 farm bill.
“I think the seed cotton program is a good program, and well thought out,” Shurley said. “The uncertainty is for timing and when it will take place.”