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St. Louis Post-Dispatch

Lee Enterprises

Tuesday, November 17, 2009 9:33 PM CST
Agriculture outlook is cautiously optimistic

By AMY ROCHKES, Shelby County Farm Bureau Manager

Economists are painting a “cautiously optimistic” outlook for United States agriculture, with crop and dairy producers likely faring better than livestock producers, who will still face challenges in the year ahead.

Joe Glibber, U.S. Department of Agriculture’s chief economist, says grain and oilseed demand remains strong, and relatively low ending stocks means that markets still have the potential for some price volatility. For livestock, Glibber does see price recovery, with higher prices forecasted for 2010.

Glibber also believes farm income should improve in 2010 if input costs do not spike as they did in 2008. For 2009, net cash farm income is forecast to fall to an aggregate $68 billion in 2009, however, down a staggering $30 billion from a record $98 billion in 2008.

All things considered, agriculture is weathering the current economic downturn “pretty darn well” thanks in a large part to exports. For the last two years, exports accounted for 33 percent of cash receipts for agriculture. Trade is a major driver of prosperity for farmers. Agriculture and aviation are the only two industries in the U.S. that are net exporters.

Most private economists are forecasting a falling dollar in the year ahead, but the U.S. could see a rise in farm exports, which makes the U.S. more competitive overseas. U.S. agriculture needs to focus on exports to developing countries with an expanding middle-class population.

The middle class in developing countries is where the action is going to be. Agriculture should be very optimistic about the long-term future. It all starts with demand, and demand is expected to improve in these developing countries.

Times are tough for all livestock producers due to “dreadful demand at home, restaurants and abroad.” Poultry and hog producers have been particularly hard hit. For grain producers clearing weather will likely mean lower prices into early November, but moderate price strength into the winter for both crops due to strong exports and ethanol demand.

Agriculture has some real serious challenges ahead in the livestock and grain sectors. The picture for crop producers comes in as “not bad,” certainly not “great,” if input costs are kept under control.

When the general economy turns around enough to bring consumers back to the market, agriculture will see some noticeable improvements in 2010 farm income.

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