Georgia: State’s Crop Outlook Clouded By Trade, Storm

Cotton lint blown to the ground by Hurricane Michael. Photo: Andrew Sawyer, University of Georgia

The 2019 Georgia Ag Forecast Series underscored a variety of challenges facing Georgia’s farmers as they move into the 2019 crop year, including the ongoing recovery from Hurricane Michael and continuing low commodities.

Hurricane Michael

Georgia Farm Bureau President Gerald Long, speaking at the Jan. 22 meeting in Macon, said the crop damage from Hurricane Michael was the worst he’s experienced.

“It’ll be several years getting past that,” Long said. “Some folks are still picking cotton. We’ve never picked cotton the first part of the next year. It’s been a very challenging year. It doesn’t really matter what type of agriculture, and the impact is not just for farmers.”

Long, who is from Decatur County, noted that one cotton gin in southwest Georgia was expecting to handle 180,000 bales but will wind up ginning approximately 50,000 bales.“I challenge each one of us as leaders in whatever part of the industry. We’re going to have to be very understanding,” Long said.

“The bankers and everyone else. I understand the bankers have got their head against the wall trying to figure out what to do to refinance those farmers.”

International Ag Trade

Beyond the issues created by the hurricane, the event addressed other themes, including international trade.

“There’s a lot of things going on right now in the ag sector,” said UGA Assistant Professor of Agricultural and Applied Economics Adam Rabinowitz. “You really do hope at times you can pull something out of a hat that says this is the golden egg or the rabbit. The situation is a little rough.”

Cotton, peanut, corn, and soybean producers are all wrangling with trade issues and it is unclear how long it will last.

Cotton

Rabinowitz said cotton exports are declining in part because of increasing strength of the U.S. dollar. Increases in ending stocks are contributing to lower U.S. cotton prices, which UGA forecast between 65 cents and 75 cents per pound. Rabinowitz forecast net cotton return of $310 per acre for irrigated land and $90 an acre for non-irrigated land (not accounting for land rent).

Peanuts

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After record peanut production in 2017, a significant reduction in acreage in 2018 pushed production down. Overall demand has increased steadily in spite of declines in exports over the past three years. 2017 ending stocks of more than two billion pounds were the third highest in the last 10 years.

“We need to look for opportunities to move those peanuts,” Rabinowitz said.

Prices near $425 per ton are possible for the 2019 peanut crop. UGA forecast net peanut return of $270 per irrigated acre and $90 per non-irrigated acre, minus land rent.

Corn

Rabinowitz said prices for Georgia corn would likely be around $4.50-$4.60 per bushel, but the big question surrounding U.S. corn is whether strong exports would continue. Rabinowitz noted that the exports of U.S. corn would depend on corn crops produced in South America and trade relations between those countries and China.

Corn acreage is likely to increase in 2019 because of lower soybean prices relative to corn. Corn net return is forecast at $280 per irrigated acre and $65 per non-irrigated acre (minus land rent).

Soybeans

Soybean producers are likely to decrease acreage in 2019 due to lower prices. Soybeans have been under tremendous pressure related to U.S. trade conflict with China, which has resulted in diminished exports and increased stocks.

The soybean outlook is highly dependent on China, which has decreased its use of soybeans in feeding its hogs. The forecast net return on soybeans is forecast at $240 per irrigated acre and $45 per non-irrigated acre, minus land rent.

Input costs for seed prices, fertilizer, machinery, labor, and interest are all increasing, while land values and cash rents are stable, diesel fuel is down, and chemicals vary.

Livestock and poultry

UGA Center for Agribusiness & Economic Development Director Kent Wolfe reviewed factors affecting commodity prices in meat production. Combined, production of poultry, beef and pork is forecast to double in the years 2018-2020 over the average between 2013 and 2017.

Wolfe noted a decline in heifer retention and increase in slaughter of beef cattle. Calf prices have declined since 2014.

Poultry prices fell over the second half of 2018, and Wolfe pointed out that retailers began promoting more beef and pork over chicken during the summer and fall.

Increased pork production has created downward pressure on pork prices. Wolfe noted that China’s domestic pig population is being affected by African Swine Fever.

The Farm Bill

Rabinowitz also gave a brief review of the 2018 farm bill.

“We see a lot of positive, assuming these [policies] can actually be implemented,” Rabinowitz said. “The rules and regulations have to be written, which requires the USDA to get to work.”

UGA College of Agricultural & Environmental Sciences (CAES) Dean Sam Pardue gave a review of worldwide population and food topics, as well as a review of CAES’ performance and enrollment. In fall of 2018, CAES had more than 2,000 students enrolled, and Pardue noted that UGA is a top university in the nation at bringing new products to market.

Between 13 and 17 percent of the university’s inventors are CAES faculty, which accounted for three fourths of the revenue from new technology generated by UGA inventions.

“You should be proud of the fact that those scientists are creating things,” Pardue said. “The scientists in the college generate information that people are willing to pay money to license.”

One farm bill provision drawing a lot of interest from farmers is the legalization of hemp production. Pardue said the question regarding hemp production was whether it would progress similarly to the state’s blueberry production or like ostrich production, which did not realize its touted potential.

Pardue noted the farm bill requires state departments of agriculture to consult with their governors and chief law enforcement officers to devise licensing and regulatory plans that most be submitted to the USDA for approval. Hemp cannot contain 0.3 percent THC, the hallucinogenic compound found in hemp and its cousin, marijuana.


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