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Will law of averages give farmers a better deal in 2003?

Recent years haven’t been kind to farmers in Mississippi. Low commodity prices combined with an unusual number of weather-related problems have made it challenging times for Mississippi agriculture.

Will 2003 be any better? Farm leaders are cautiously optimistic.

“The law of averages has to be on the farmer’s side this year with the weather,” says David Waide, president of Mississippi Farm Bureau. “Four out of the past five years the weather in some areas of the state has been devastating. It has either been too wet, too dry, there have been hurricanes or something else. The law of averages has to fall to the farmer this year.”

Waide said most of the commodity markets seem to be strengthening. Cotton and corn are up from this past year, and prices for pork and cattle seem to be strengthening. Exports overall seem to be better on most of the farm commodities. A major barrier to exports is the ban on genetically modified crops in some foreign countries.

“We’ve got serious problems still in some of the genetically-altered trade barriers we see,” Waide said. “We’re seeing it in Europe primarily, but also in China and Russia to some degree. Generally genetically-modified plants or animals or any kind of growth hormone in animals used seem to be the areas they try to block us on. We have the safest food in the world, and our position is we don’t object to science-based restrictions. But we do object to trade barriers that are artificially created. Those are the issues I see that will keep some lid on prices. Hopefully we are going to be able to resolve most of the disputes and hopefully have market access.”

Farmers are also working to get country-of-origin labeling passed at the national level. Currently country-of-origin labeling is voluntary. Ag groups want to make it mandatory.

“In the difficult times we are in worldwide, we just think the consumer has a right to know where their food is grown and the production conditions it is grown under,” Waide said. “This just insures the consumer that they will have safe food to eat. That is a very important issue, I think, not only to the producer, but the consumer.”

Mississippi Agriculture Commissioner Lester Spell is optimistic that production will be higher in 2003.

“Our producers were reaching toward record harvests in 2002, but many suffered setbacks at the hands of two tropical storms that passed through our state in October,” Spell said. “Without such storms in 2003, I see excellent chances for a year of recovery and prosperity. Hopefully, the world economy and the value of the dollar will allow our commodities to be more competitive. This will mean higher production.”

Spell said one possibility for improving farm profitability will be cooperative marketing.

“In the next few years, I believe that you will see our producers exploring organizations with cooperative structures,” Spell said. “This will allow participants to decrease their market risks and have ownership in a value-added process.”

Regarding the impact of the new Farm Bill, Spell said any programs that have been successful in the past were reinstated in the new bill. But he says the Farm Bill required some adjustments as new programs and increased allotments were put in place.

“As producers iron out the wrinkles, there are advantages to adapting to this Farm Bill,” Spell said. “New provisions allow for payments to offset low commodity market prices, and a considerable increase in conservation assistance promotes putting profitable conservation on the land.”

Jim Quinn, marketing specialist for Mississippi Farm Bureau and the Extension Service at Mississippi State, predicted that 2003 is going to be better than 2002.

“But it is not going to be great,” Quinn said. “We have tighter U.S. soybean stocks, so I look for better soybean prices. And there is good demand for soybeans. For cotton, we have tighter world stocks, and that is leading to better prices, but I don’t think it is going to outdo what the government program is going to pay them. With corn we have tighter stocks, but our exports are lagging and our domestic use is declining. So I think we’ll see equally as good as last year as far as corn prices, possibly better if they take advantage of the better prices when they are offered. They aren’t going to come and stay. They are going to come and go, I’m afraid.”

Soybean farmers in the U.S. will be watching to see how the South American crop turns out, and how they go about marketing it.

According to the Extension Service, the estimated value of Mississippi’s 2002 agriculture production was down by almost 7% from the previous year primarily because of weather. While some commodities posted significant gains over their previous year’s total, the state’s big three — poultry, forestry and cotton — all posted losses. Mississippi State University agricultural economists predict Mississippi’s total value of production for 2002 to be $4.5 billion, compared to $4.9 billion in 2001.

Poultry remained the top commodity in the state with a value of $1.4 billion despite a decline of 17% from the previous year.

“The Russian ban on U.S. poultry only lasted six or seven weeks, but it took much more time to recover,” said John Anderson, agricultural economist with MSU’s Extension Service. “In fact, we may never fully regain the market we lost to Brazil, China and domestic Russian poultry producers. The ample supply of all meat products hurt livestock and catfish prices as well.”

The total value of cattle/calves, milk and hogs is expected to drop 14% in 2002 to about $300 million. Cattle/calves are valued at $194 million, down 8%, and milk’s value is $65 million, down 19%. The biggest percentage losses for 2002 will be the 31% decline for hogs. Their value is predicted at $44 million.

Forestry, the state’s number two commodity, declined only 1% in 2002 with a predicted value of $1.06 billion. The decline was more drastic from 2000 to 2001 when forestry’s value decreased 17%.

“We certainly hope this small decrease for 2002 represents a leveling off for the timber industry and the sign of better economic conditions in 2003,” Anderson said.

All agronomic crops combined to slightly edge forestry with a total value of $1.15 billion. Cotton is the state’s top crop with an estimated value $432 million despite an almost 2% decline from 2001, which was attributed largely to late season crop losses.

“Cotton was on track for an enormous crop until Tropical Storm Isidore and Hurricane Lili dumped a ton of rain on the state,” Anderson said. “Growers’ cotton lost quality, and they struggled to harvest later maturing fields, especially in the northeastern counties. When the impact of quality losses is fully realized, the value of the state’s 2002 crop could drop even more. An additional factor in cotton’s value decline is the decrease in acreage from the unusually high acreage in 2001.”

Increased acreage and improved prices helped bolster soybean and corn values by 59% and 57%, respectively. Soybeans are valued at $261 million, and corn is valued at $157 million. The largest percentage decline among agronomic crops is predicted for rice, which declined almost 22% — from $80 million to $63 million.

Anderson said corn and soybeans benefited from the increased acreage as well as improved prices. Corn prices were up 15% to 20% to between $2.20 and $2.60 per bushel, and soybeans were up 10% to 20% to between $4.95 and $5.85 per bushel.

“Improvements in corn and soybean prices may reduce the amount of government payments nationally,” he said. “Payments will not likely decline as much here as in other states because of t
he i
mportance of cotton and rice production in Mississippi. Projections from USDA are for about a 20% decline in payments. Still, the total will be around $415 million.”

Contact MBJ contributing writer Becky Gillette at <a h

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