Post on 23-Dec-2015
Don ShurleyDepartment of Agricultural and Applied Economics
The University of Georgia
Georgia Farm BureauFebruary 10, 2011
Macon, GA
Financial Condition- Cesar Escalante
Inputs Situation- Forrest Stegelin
Cattle and Feed- Curt Lacy
Dairy- Tommie Shepherd
Fruit and Vegetables- Greg Fonsah
Cotton- Don Shurley
Grains and Soybeans- Nathan Smith
Green Industry- Forrest Stegelin
AgribusinessAgribusinessEconomy Georgia’s Largest SectorEconomy Georgia’s Largest Sector
Beef4.9%
Peanuts5.5%
Horses5.5%
Timber5.5%
Broilers6.1%
Greenhouse3.6%
Dairy3.3%
Container Nursery
2.9%
Eggs7.9%
Cotton9.8%
Rest of commodities
45.0%
Livestock & Aquaculture
10.3%
Vegetables8.1%
Ornamental Horticulture
6.2%
Other Income4.9%
Forestry & Products
4.4%
Fruits & Nuts3.3%
Row & Forage Crops
16.7%
Poultry & Eggs46.1%
2009 Total Farm Gate Value = $11.3B First Decline in Decade!
2010 – Up significantly, across the board!
-
$313,000 - $20,000,000$20,000,000 - $45,000,000$45,000,000 - $80,000,000$80,000,000 - $200,000,000$200,000,000 - $443,441,000
What About 2011?Farm Gate and Immediate Impacts
-Continued high prices for crops, but variability also high
-Input Costs are Rising AlsoFuel, Fertilizer, Feed, Land Rent
-High prices and optimism starting to translate in improved durable input purchases
-Increased production means increased processing
$313,000 - $20,000,000$20,000,000 - $45,000,000$45,000,000 - $80,000,000$80,000,000 - $200,000,000$200,000,000 - $443,441,000
Other Major Factors That Continue To Impact GA Agriculture in 2011 and Beyond
• Water – policies impacting supply and demand, Tri-state water, regional water plans. • Labor – Immigration policies, changes to guest worker programs.• Exports/Imports – Free trade pacts, Savannah harbor deepening, value of the $ relative to
other currencies.• Regulatory – “Greenhouse gas” emissions, pesticide registrations, point source pollution
permits, contract production, other animal ag potential regulations, food safety. • Ag Economic Development – Ga. Tax council recommendations and actions including
economic development incentives. Fed – economic development/transportation funding • Energy Policy – GHG regulations, Cap and Trade, Food/fuel debate & tax and development
incentives, mandates, import restrictions for bio and alternative fuels.• Economic Recovery- family incomes, demand for green industry.• FARM BILL 2012 – new congress, tight funding , Ga. Congress and Senate changes on appropriations/ag committees. Concern – safety net for primarily crop ag in Georgia, “crop” insurance and possible expansion to other products.
Long Term U.S. Dollar Index – 1990 to Present
Relatively Weak Dollar Continues to Help Exports (Cotton, Meats), Hurts Imports
Petroleum Prices - Steady Climb Again?
Crop Agriculture • Concentrated in south and east
GA.• 60% of the total value is in 2
crops- cotton and peanuts• Record High Prices in Almost all
Georgia Row Crops• Record High Feed Prices for
Animal Agriculture!
$0 - $1,000,000$1,000,000 - $5,000,000$5,000,000 - $15,000,000$15,000,000 - $30,000,000$30,000,000 - $79,313,000
Tight Stocks Since ’07 in Feed Crops Despite Large Crops
19.8%17.5%
11.6% 12.8% 13.9% 13.1%
5.5%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
0%
10%
20%
30%
40%
50%
Ending Stocks ProductionDomestic Use and Exports Stocks:Use
US Corn Supply and Demand
More Corn Used for Ethanol as Energy Act Mandates
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
96/9
7
97/9
8
98/9
9
99/0
0
00/0
1
01/0
2
02/0
3
03/0
4
04/0
5
05/0
6
06/0
7
07/0
8
08/0
9
09/1
0
10/1
1
Feed and Residual Ethanol Exports Food Seed and Other Industrial
Million bushels
Source: USDA, 1/12/2011
Soybeans – Global Demand Keeping Supply Tight
8.6%
15.6%18.7%
6.7% 4.5% 4.5% 4.2%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
0%5%10%15%20%25%30%35%40%45%50%
Ending Stocks Production Total Use Stocks:Use
US Soybean Supply and Demand
0
10
20
30
40
50
60
70
2000 2001 2001 2003 2004 2005 2006 2007 2008 2009 2010
Mill
ion
Bale
s
World US
Cotton- World and US Ending StocksCotton- World and US Ending Stocks
53.6%
57.7%
48.4% 49.0%
55.5% 53.0% 50.3% 49.2% 55.0%
37.2% 37.3%
0
2
4
6
8
10
12
14
16
18
2000 2001 2001 2003 2004 2005 2006 2007 2008 2009 2010
Mill
ion
Acr
es
US Cotton Acres Planted, 2000-2010.US Cotton Acres Planted, 2000-2010.
Peanut Ending Stocks Declining, Prices Highest Since Quota Days
700?840
Wheat – Reduced Production in US and World Help Wheat Prices
US Wheat Supply and Demand
Non-Irrigated Row Crops Georgia, Net Return Per Acre, 2011
NON-IRRIGATED
RR Grain
Cotton Peanuts Corn Soybeans Sorghum Wheat
EXPECTED YIELD 700 2,800 85 30 65 55
CURRENT 2011 PRICE $1.00 $550 $6.00 $12.00 $5.64 $7.00
GROSS RETURN $700 $770 $510 $360 $367 $385
TOTAL VARIABLE COSTS $411 $542 $285 $226 $214 $189
RETURN ABOVE VARIABLE COST $289 $228 $225 $134 $153 $196
Irrigated Row Crops Georgia, Net Return per Acre, 2011
IRRIGATED
RR Grain Int Mgmt
Cotton Peanuts Corn Soybeans Sorghum Wheat
EXPECTED YIELD 1,100 4,000 185 55 100 75
CURRENT 2011 PRICE $1.00 $550 $6.00 $12.00 $5.64 $7.00
GROSS RETURN $1,100 $1,100 $1,110 $660 $564 $525
TOTAL VARIABLE COSTS $536 $645 $577 $309 $295 $299
RETURN ABOVE VARIABLE COST $564 $455 $533 $351 $269 $226
Expect some U.S. crop acreage shifts in 2010 as well as in Georgia
2003 2004 2005 2006 2007 2008 2009 2010 2011Corn 340 335 270 280 510 370 420 300 ↔Cotton 1300 1290 1220 1400 1030 940 1000 1330 1550Peanuts 545 620 755 580 530 690 510 565 ↓Sorghum, Grain55 45 40 40 65 60 55 45 ↓Soybeans 190 280 180 155 295 430 470 270 ↓Tobacco 27 23 16 17 18.5 16 14 12Wheat 380 330 280 230 360 480 340 170 225
Georgia 7 Major Row Crops Planted Acres*(1,000 Acres)
Beef, Dairy, Pork & Poultry OutlookBeef/Dairy/Pork/Equine Broilers/Eggs
$5.2B 2009
$1.2B 2009
$0 - $1,000,000$1,000,000 - $10,000,000$10,000,000 - $40,000,000$40,000,000 - $100,000,000$100,000,000 - $340,554,000
$0 - $3,000,000$3,000,000 - $5,000,000$5,000,000 - $10,000,000$10,000,000 - $15,000,000$15,000,000 - $39,310,000
Meat supplies will be down slightly in 2011
Source: USDA-WASDE, January 2011 Report
2011 Beef Cattle Winter School Update
Commodity
2009 20102011
Projected 10 vs 09 11 vs 10
BILLION POUNDS PERCENT CHANGE
Beef 25.96 26.31 25.66 1.33% -2.53%
Pork 22.99 22.44 22.55 -2.45% 0.49%
Total Red Meat* 49.27 49.05 48.49 -0.45% -1.15%
Broilers 35.51 36.85 37.25 3.64% 1.07%
Total Poultry** 41.67 42.99 43.31 3.07% 0.74%
Total Red Meat & Poultry 90.95 92.04 91.80 1.18% -0.26%
C-N-0201/29/10
Declining cow numbers reflect lack of profitability in the sector
01/18/11
Livestock Marketing Information Center
Data Source: USDA-AMS, Compiled & Analysis by LMIC
Calf Prices Starting Out Higher, Current Futures Indicate Substantially Higher Prices in 2011
Projected Prices 2011 and Beyond
Source: USDA, LMIC and UGA
• Not very pretty• Fertilizer and feed costs
will be the differences in profits (or lack of).
• Longer-term producers are going to have look at increasing forage/less feeding.
Projected Profits for 2011North Georgia
South Georgia
Variable Costs ($/cow)
$497 $466
Variable Costs ($/Cwt.)
$117 $105
Total Costs ($/cow)
$730 $641
Total Costs ($/Cwt.)
$172 $145
Will Broiler production respond to high feed cost/ tighter profit margins?
• Broiler production up 3% in 2010
• Forecast to be about same in 2011.
• Feed cost puts late year in question.
BROILER CHICKS PLACEDWeekly
155
160
165
170
175
180Mil. Birds
Avg.2005-09
2010
2011
BROILER PRODUCTIONFederally Inspected, Weekly
650
700
750
800
850
900
950
1000Mil. Lbs
Avg.2005-09
2010
2011
Broiler Prices Tract 2010 First Half ’11 Improved Prices Last Half - Feed Key to Profits! Total Value
Increased in GeorgiaBROILER PRICES
12-City Composite, Weekly
68
73
78
83
88
93Cents Per Pound
Avg.2005-09
2010
2011
Dairy Price Relatively High but Profits Slim
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Do
llar
s/cw
t.
2007 2008 2009 2010 2011 (projected) 2012 (projected 2/2)
2011
2010
Livestock Summary
• Higher sales prices on reduced supplies and improved demand.
• Higher input costs– Fertilizer/pasture costs for cattle– Feed for beef, dairy and hogs
• Profits will require some effort and management.
• Risk management will be key.
What About 2011/12?• Animal prices remain high, some
opportunity, profits depressed because of feed and input cost
• Crop prices remain high due to tight supply demand balance. Profits good
• Vegetable and fruits production value growth
• Ornamental markets stable $0 - $20,000,000$20,000,000 - $45,000,000$45,000,000 - $80,000,000$80,000,000 - $200,000,000$200,000,000 - $316,814,000
Bottom Line – returns higher, profits? Deal with input and
output variability!
Thank you.
Questions?