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Livestock prices up significantly, while row crops saw decline

Another year of record agricultural yields

While prices weren’t as high as in 2003, Mississippi saw record yields of commodity crops in the 2004 growing season.

“There were a lot of bright spots this year,” said Patrick Sullivan, director of market development, Mississippi Department of Agriculture and Commerce. “For four years in a row, we have produced record yields. In 2001 and 2002, we had some hurricane problems, so we weren’t able to harvest all of it. We had better than average yields, but didn’t meet the potential because of weather problems. These past two years, we had record yields and good harvest conditions.”

In early September, a lot of state cotton producers weren’t very optimistic about the harvest. But once picking started, they were pleasantly surprised.

“They exceeded last year’s yield considerably,” Sullivan said. “They picked the best crop ever in the Delta. Corn, rice and soybeans also had their greatest year ever. A lot is due to weather. The U.S. is also getting more efficient at production. A lot of it you can attribute to technology and good management on the producer level. The remainder you can attribute to having a blessed growing season.”

Impact felt far and wide

With agriculture the No. 1 business in Mississippi, what happens on the farm has wide-ranging impacts on the state’s economy. “Almost everyone in Mississippi is affected, whether they know it or not, by agriculture,” Sullivan said.

At the end of 2003, a lot of row crop commodities enjoyed higher prices. By the end of 2004, prices had fallen.

“But we have no control over that,” Sullivan said. “We’re not playing on a level playing field these days. Other countries have cheaper land, cheaper labor and are able to produce at a much cheaper cost than we can. We have to do anything we can in Mississippi to get an edge and compete in the global marketplace.”

Good and the not-so-good

David Waide, president of Mississippi Farm Bureau Federation, said since commodity prices were higher earlier in the year, some farmers were able to hedge their crops at a profitable level.

“Then we saw a downturn in the market, and individual producers who didn’t hedge some probably didn’t have a very good average because prices went pretty low after the peak early in the year,” Waide said. “Most livestock producers had good production, and the prices turned out pretty good, too, above average throughout the year.”

On the bright side, Waide said this was the first season in a while that Mississippi farmers didn’t face drought conditions. There was pretty much adequate moisture throughout the year.

“Maybe we have passed the drought periods,” he said. “It seems we are on a wet cycle side now, and that generally works to the farmer’s advantage.”

Waide added that the weakening dollar is helpful to farmers regarding exports because U.S. commodities are cheaper when the dollar is weaker. He said there is adequate production in the U.S. to meet the domestic need, and still have export capability.

Forecasted value up for 2004

The USDA forecasted value of ag production in Mississippi in 2004 is approximately $5.38 billion. That is up about 3% from 2003, said John Anderson, Extension ag economist at Mississippi State University.

“A lot of people, I think, are sort of surprised to see our value of ag production this year because crop prices are much worse than last year,” Anderson said. “We have had crops and livestock prices moving in a different direction. Livestock prices and production have been outstanding. But crop prices have fallen a lot since last year. The value of row crops is down, but livestock production is up. Poultry is up strongly this year.
“The value of broiler production is up between 25 and 30%. That is due to a combination of higher production, which is up 3%, and prices that have increased tremendously. Earlier this year, broiler prices were very strong. Right now, prices are not much higher than a year ago. But in the spring, prices were up as much as 50%. So, for year the value of production is up 25% to 26%. That really is the biggest factor in the overall state increase.”

Increased demand seen
for beef, poultry, pork

Higher livestock prices have been tied to increased demand for beef, poultry and pork. Anderson said foreign animal diseases have also had a big impact on the livestock market.

“In net, those impacts have been mostly positive,” Anderson said. “The BSE event last year in Washington State caused us to lose a lot of our export business for beef. A lot was picked up by poultry and especially pork. That has been a big factor giving us really high pork prices. We’re not importing beef from Canada, and that has been supportive of domestic cattle prices. A rising tide lifts all boats: if beef and pork prices are up, it helps support poultry prices. Because of strong demand for all meats and export disruptions that have been fairly positive — especially for pork — all of our livestock commodities enjoyed good prices this year.”

Catfish market improving?

The market for catfish improved this year after three years of low prices. Anderson said projections for sales of catfish for food will be about $263 million, an increase of 17% in value over last year.

“Production is actually down,” Anderson said. “They have gone through three years of really low prices. Historically, this year’s prices haven’t been phenomenal by any means, but are much improved over a year ago and especially two years ago.”

Row crop value slips a bit

When compared with row crops, the situation is reversed. There have been declining values of production in all the major row crops. The value of cotton production is down 17% to 18% over last year. But there was very good production with a new record state yield of 1,000 pounds of cotton per acre.

“The soybean state average of 39 bushels per acre ties the record set last year,” Anderson said. “We have had two years of very good production in soybeans. Prices of all of our row crops are down from last year. Last year we had good production, but some other major soybean producing regions — the Midwest, for instance — didn’t. So we got very good prices. That isn’t the typical situation. Across country this year there very good growing conditions for all our crops, and that is being reflected by lower prices for all of our commodities.”

The value of cotton production is estimated at about $520 million, and if cotton seed is included, $595 million. That represents a decrease of about 15%. The projected value of soybeans is $343 million, down just over 12%. Corn value of production is estimated at $120 million, down 25%. Rice value of production is estimated at $103 million, down 3%.

Corn was the least affected of the major crops. The lower value in part was attributed to fewer acres of corn being planted because soybean prices were so attractive at planting time.

Government payments will probably be down sharply in 2004 compared to 2003 with an estimated 30% decline in farm payments. That is attributed to the fact that in 2003 many farmers received farm payments that were actually due in 2002.

“Last year government payments were artificially inflated because we had almost two years of payments received in that calendar year,” Anderson said. “This year, we are getting back to a more normal schedule of program benefits.”

Overall, Anderson pegs 2003 as a very good and fairly balanced year. But regionally the impacts are different. The Delta, which has most of the state’s row crop production, didn’t fare as well this year as 2003. South Mississippi, where poultry is a major commodity, fared better.

Ocean Springs-based freelance journalist Becky Gillette writers regularly for the Mississippi Business Journal. Contact her via e-mail at bgillette@bellsouth.net.

About Becky Gillette

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