Friday, January 8, 2010

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Idaho Agriculture Stumbles in 2009 Tripped Up by Low Commodity Prices
Written by Bill Loftus

MOSCOW, Idaho – Idaho agriculture's projected cash receipts for 2009 dropped 17 percent to $5.4 billion from 2008, the largest single-year decline in more than 40 years. A tough year for Idaho's dairy, livestock and some key crop sectors determined the industry's overall performance.

Even though much of the double-digit increases in total revenues of the previous two years evaporated, receipts are still 16.6 percent above 2006. Unfortunately, expenses rose 27 percent during the same time period.

The annual economic analysis, "The Financial Condition of Idaho Agriculture: 2009 Projections," was released Wednesday by the University of Idaho College of Agricultural and Life Sciences.

John Hammel, the college's dean, presented the analysis to the Joint Legislative Economic Outlook and Revenue Assessment Committee Wednesday at Boise.

"Agriculture as a diverse industry is a strong stabilizing force in Idaho's overall economy while individual growers experience volatility in the commodity market prices and increasing costs of inputs, both factors that affect their net incomes," Hammel said.

The picture painted by the numbers is that even a down year for one sector, livestock, is partially offset by another, crops, which declined 11 percent, half of livestock's 23 percent drop. Diversity is a key to the industry's overall economic performance.

Jobs are also part of agriculture's stabilizing effect on Idaho's economy. Farmers and ranchers may cut back and cut some jobs, but cattle still must be fed and crops planted and harvested.

Net farm income, the ultimate measure of Idaho agriculture's performance for farmers and ranchers, dropped 47 percent to $1.018 billion from $1.904 billion in 2008.

Net farm income showed the industry's volatility in recent years. In 2006 net farm income dropped 20 percent, in 2007 it surged 71 percent and in 2008 it rose 19 percent.

The numbers reveal a key factor that contributes to the agricultural industry overall stability, said report co-author Garth Taylor, an economist in the UI Department of Agricultural Economics and Rural Sociology at Moscow.

"To me it shows how mobile farmers are," Taylor said. "They'll shift around and grow different crops to respond to market conditions. Sugarbeets were a prime example of that during 2009," he said.

Higher cash receipts for sugarbeets, barley, potatoes, onions, and greenhouse and nursery crops helped stabilize agriculture's overall performance during a dramatic downturn for its livestock industry.

Crops generated more cash, $2.745 billion compared to livestock's $2.610 billion, for the first time since 2000. Livestock receipts dropped 23 percent, led by a decline in milk receipts fall from $2.1 billion to $1.4 billion or one third. Cattle and calves declined 8 percent or $98 million to $1.085 billion.

Sugarbeets provided the 2009's sweet spot for Idaho growers, who harvested 47,000 more acres, produced 55 percent more sugarbeets and enjoyed an 11 percent average price increase. Those factors boosted sugarbeet receipts to $252 million, a 72 percent increase from the previous year.

Barley production rose an estimated 3 percent and growers reaped a 5 percent price increase, boosting receipts 12 percent in 2009 to $259 million.

Potatoes generated $796 million, a 2 percent increase from 2008, to remain Idaho's top cash crop. Record yields averaging 411 hundredweight per acre helped grow overall production 13 percent, which offset a 1 percent decline in average prices for 2009.

Onions yielded a 43 percent or $13 million increase in cash receipts for growers in 2009, reflecting a 5 percent increase in production and higher prices.

Drops for wheat and hay, the state's No. 2 and No. 3 crops, tempered gains by other crops. The value of wheat sales fell 28 percent or $195 million to $512 million. Reflecting weak demand from dairies, hay receipts fell 40 percent or $270 million to $406 million.

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