Even with record year, farmers are still hurting

Weather, economy, costs squeeze bottom lines from Corinth to Cleveland to the Gulf Coast

Despite a challenging year of bad weather and a faltering economy, Mississippi agriculture set a new value record year in 2011, according to a report form the Mississippi State University Extension Service.

However, spiraling input costs as well as financial woes at home and abroad and an angry Mother Nature put a squeeze on farmers’ bottom line last year.

The historic floods of 2011 seemed to have washed crops out of fields as well as fish out of streams and rivers onto land.

The value of the state’s agricultural commodities reached a record of more than $6.7 billion last year. When government payments are added, the value of production exceeds $7 billion, an all-time high for the Magnolia State.

The previous record was approximately $6.9 billion, which was set in 2010.

Poultry and eggs again topped the list of the state’s commodities, ringing in at $2.44 billion. However, the commodity is a case study in what producers of most commodities faced in 2011 as they struggled to just break even due to weak prices and increased costs.

As example, Sanderson Farms Inc., the only publicly traded poultry grower based in Mississippi, saw net sales for fiscal 2011 of $1.978 billion, compared with $1.925 billion for fiscal 2010. But, the Laurel-based company posted a net loss of $127.1 million, or $5.74 per share, compared with net income of $134.8 million, or $6.07 per share, last year.

Joe F. Sanderson Jr., chairman and CEO of Sanderson Farms, said, “Our results reflect the combination of weaker poultry markets throughout the year and the significantly higher feed grain costs we experienced during the entire year.”

MSU Extension economist Dr. John Michael Riley said, “The biggest challenge this year was the cost of feed. We saw a lot of this nationwide with poultry farms going out of business and filing for bankruptcy. Their costs just got ahead of their revenues.”

Foresters also struggled, mainly due to the economy. Forestry was second in 2011 with a value of $1.04 billion. That is down slightly from 2010, but up 19.7 percent over a disastrous 2009.

Assistant Extension forestry professor James Henderson said supply is outstripping demand.

“Home construction in the U.S. has not increased much since the housing bubble burst in 2007,” Henderson said. “The supply of harvestable timberland has not been adversely impacted by weather in 2011, which has had a further negative impact on timber prices.”

Soybeans, this year’s No. 3 commodity, enjoyed solid prices and dodged the year’s bad weather. Yet, it still was not a banner year for producers.

Estimated at $860 million, soybean farmers enjoyed a record yield of 41 bushels per acre. Demand, especially overseas, buoyed prices through much of the year before dipping just as farmers were getting the crop from the field.

Riley said, “Export demand was very beneficial through the first half of the year as prices moved higher, but lackluster demand and a growing inventory suppressed prices moving through harvest.”

While soybeans escaped the year’s terrible weather — severe weather in the spring followed by extended drought and a historic Mississippi River flood — other commodities suffered. This included the state’s No. 5 commodity, corn, which has an estimated value of $595 million. Drought impacted yields that fell from 136 bushels per acre in 2010 to 118 bushels in 2011. That was the lowest per-acre yield in five years.

“The 2011 corn crop had a stressful, hot and dry year,” said Erick Larson, Extension small grains specialist. “Plus, we lost about 40,000 acres to Mississippi River flooding and backwater.”

The drought actually boosted some commodities. Grain sorghum jumped up into the No. 15 spot on the list, its value rising 653 percent compared to 2010. More drought-tolerant than corn, grain sorghum acreage went from 12,000 acres and a 65 bushels-per-acre yield in 2010 to 52,000 acres with a yield of 65 bushels per acre.

Other commodities that saw improved numbers over 2010. These include cotton, which moved up a spot to No. 4 with a value of $599 million, and wheat, which made the biggest jump, going from 14th to 10th and posting a 2011 value of $127 million.

Other commodities moving up the ranking are catfish (from seventh to sixth, value $222 million) and cattle/calves (from eighth to seventh, value $155 million).

The biggest loser is rice. Dropping two spots to eighth with a value of $153 million (compared to $226 million in 2010), rice’s decline is mainly attributable to decreased acreage, said Nathan Buerhing, Extension rice specialist.

Peanuts dropped out of the top 15. Also seeing decreased planting, peanuts total $16 million, 16th in the ranking.

“Livestock and the major row crops had strong markets during the year,” said Riley. “But, farmers did not get a break in the cost of production. Land prices, chemical prices, labor costs, fuel, energy and equipment are all increasing each year.”

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