Dr. Curt Lacy Department of Agricultural and Applied Economics
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Dr. Curt Lacy Department of Agricultural and Applied Economics Agribusiness Economy Georgia’s Largest Sector 65 products with significant farm value production$12.0B farm value, $68.9B direct and indirect value 380,000 jobs Ag Forecast 2012 Authors – Humphreys, Escalante, Fonsah, Shumaker, Smith, Smith, Shurley, Stegelin, McKissick, Lacy, Morgan, Shepherd, Wolfe, Kane, Gaskins, Molpus Catoosa Towns Fannin 2009 Total Farm Gate Value GA = $11.3 B Rabun Union Murray Whitfield Walker Gilmer m ha White rs be Lumpkin Ha Gordon Chattooga Stephens Pickens Dawson Cherokee Bartow Franklin Banks Hall Floyd Jackson Polk Paulding Barrow Gwinnett Cobb Madison Oglethorpe Ro c kd ale Fulton Lincoln Wilkes Walton DeKalb Douglas Elbert Clarke Oconee Haralson Hart Forsyth Clayton Carroll Morgan Newton Taliaferro Coweta Richmond Putnam Jasper Butts Spalding Pike Hancock Lamar Meriwether 2010 – Up significantly to $12.1 B 2011 – Likely higher from Crops 2012 – Even higher from Animals Columbia McDuffie Warren Heard Troup Greene Henry Fayette Glascock Baldwin Burke Jefferson Jones Monroe Washington Upson Bibb Harris Wilkinson Jenkins Crawford Talbot ch ee Muscogee Emanuel Peach Taylor oo Candler Treutlen Bulloch Effingham Macon Ch att ah Laurens Bleckley Houston Marion Screven Johnson Twiggs Pulaski Schley Dodge Dooly Wheeler Stewart Webster Sumter Montgom ery Dade Evans Toombs Bryan Tattnall Chatham Wilcox Telfair Crisp Quitman Liberty Randolph Terrell Lee Jeff Davis Ben Hill Long Appling Turner Irwin Clay Dougherty Calhoun Worth Coffee Wayne Bacon McIntosh Tift Early Pierce Baker Berrien Mitchell Miller Atkinson Brantley Colquitt Cook Glynn Ware Lanier Seminole Decatur Grady Clinch Thomas Brooks Camden Charlton Lowndes Echols $652,321 - $20,000,000 $20,000,000 - $45,000,000 $45,000,000 - $80,000,000 $80,000,000 - $200,000,000 $200,000,000 - $475,048,630 Catoosa Towns Fannin Rabun Union Murray Whitfield Walker Gilmer What About 2012? m ha White rs be Lumpkin Ha Gordon Chattooga Stephens Pickens Dawson Cherokee Bartow Franklin Banks Hall Floyd Jackson Polk Barrow Gwinnett Cobb Paulding Madison Lincoln Wilkes Ro c kd ale Fulton • Slow Rate of Growth for US and GA. Oglethorpe Walton DeKalb Douglas Elbert Clarke Oconee Haralson Hart Forsyth Clayton Carroll Morgan Newton Taliaferro Columbia McDuffie Henry Fayette Warren Coweta Heard Pike Hancock Lamar Meriwether Richmond Glascock Baldwin Burke Jefferson Jones Monroe • Commodity Prices Peaked in 2011, Remain Relatively High/Variable. Putnam Jasper Butts Spalding Troup Greene Washington Upson Bibb Harris Wilkinson Jenkins Crawford Talbot Emanuel Peach Taylor ch ee Muscogee oo Candler Treutlen Bulloch Effingham Macon Ch att ah Laurens Bleckley Houston Marion Screven Johnson Twiggs Pulaski Schley Dodge Dooly Wheeler Stewart Webster Sumter Montgom ery Dade Evans Toombs Bryan Tattnall Chatham Wilcox Telfair Crisp Quitman • Input Prices/Cost Continue to Rise, especially crops. Liberty Randolph Terrell Lee Jeff Davis Ben Hill Long Appling Turner Irwin Clay Dougherty Calhoun Worth Coffee Wayne Bacon McIntosh Tift Early Pierce Baker Berrien Mitchell Miller Atkinson Brantley Colquitt Cook Glynn Ware Lanier Seminole Decatur Grady Clinch Thomas Brooks Camden Charlton Lowndes • Weak Dollar Helps GA and Ag Exports, But Growth Limited. Europe Crisis is Strong Headwind to Growth. Echols $652,321 - $20,000,000 $20,000,000 - $45,000,000 $45,000,000 - $80,000,000 $80,000,000 - $200,000,000 $200,000,000 - $475,048,630 • More Policy Uncertainties, Election Year Politics vs. Needed Fiscal Policy • Another Dry Spring? Greater Potential to Impact Production. KEY MACRO FACTORS • • • • • • • Economic growth Energy cost Exchange Rates Employment Interest rates Deficits Housing market Economic Growth Gross Domestic Product Household Business Government 16,000 14,000 2,674 2,878 2,295 2,097 9,806 10,105 8,819 9,323 2005 2006 2007 2008 2,518 2,233 2,113 10,000 1,731 Billion 3,045 1,828 1,855 10,001 10,349 10,500 2009 2010 2011 2,370 12,000 8,000 3,000 2,915 1,772 1,846 2,327 1,983 1,589 2,172 1,969 1,662 1,647 1,730 6,000 4,000 6,830 7,149 7,439 2000 2001 2002 7,804 8,285 2003 2004 2,000 0 Federal Surplus or Deficit Agricultural Outlook Ag Inputs and Production Expenditures Variable costs of producing crops will climb another 15-20% in 2012, with volatile fertilizer and seed prices being primary drivers of increases. Fertilizer price follows the oil price; increasing use of complex genetic traits have increased seed prices. Pesticide prices will vary by product. Farm equipment prices anticipated to rise nearly 10% as well, as manufacturers realize high commodity prices at harvest mean more money in farmers’ pockets who may still have pent up demand for new or nearly new farm equipment and machinery. Land prices and rents also expected to increase with low interest rates and farmers with cash. Georgia Animal Industry Outlook Broilers/Eggs Beef/Dairy/Pork/Equine Towns Fannin Dade Rabun Gilmer m ha White Stephens H Gordon $1.3B 2010 Dawson Hall Forsyth Jackson Polk Madison Elbert Clarke Oglethorpe Oconee ck da le Fulton Lincoln Wilkes Walton DeKalb Clayton Morgan Newton Greene Taliaferro Columbia Warren Coweta Heard Floyd Cherokee Bartow Hancock Polk Lamar Clayton Baldwin Pike Lamar Meriwether Troup Jenkins Baldwin Burke Jefferson Jones Monroe Bibb Harris Emanuel Bulloch Crawford Talbot Emanuel ch ee Wheeler oo Evans Toombs Bryan Tattnall Pulaski Crisp Jeff Davis Ben Hill Wheeler Stewart Liberty Lee Dodge Dooly Wilcox Quitman Webster Sumter Bulloch Toombs Bryan Tattnall Chatham Telfair Crisp Quitman Irwin Worth Coffee Liberty Randolph Wayne Bacon Effingham Evans Wilcox Long Appling Turner Candler Treutlen Macon Schley Chatham Telfair Laurens Bleckley Houston Marion ah Dodge Dooly Sumter att Pulaski Schley Screven Johnson Peach Taylor Muscogee Effingham Ch Ch att Jenkins Twiggs Candler Treutlen Stewart Dougherty Wilkinson Laurens Bleckley Houston ery ah oo ch ee Richmond Glascock Upson Screven Macon Calhoun Hancock Johnson Twiggs Clay Columbia McDuffie Warren Putnam Jasper Butts Burke Wilkinson Peach Taylor Terrell Taliaferro Washington Marion Randolph Greene Henry Fayette Washington Bibb Webster Lincoln Wilkes Coweta Heard Jefferson Crawford Talbot Muscogee Oglethorpe Morgan Newton Upson Harris Elbert Clarke Oconee Richmond Jones Monroe Madison Walton DeKalb Fulton Spalding Pike Meriwether Troup Barrow Gwinnett Cobb Paulding Haralson Hart Forsyth Jackson Carroll Glascock Franklin Banks Hall Putnam Jasper Butts Spalding $5.4B 2010 Dawson McDuffie Henry Fayette Stephens Pickens Douglas Ro Douglas Carroll sh Ha Gordon Chattooga ery Paulding Barrow Gwinnett Cobb Haralson Hart Montgom Cherokee Bartow Franklin Banks r be Lumpkin Pickens Floyd am White rs e ab Lumpkin Rabun Union Murray Whitfield Walker Gilmer Chattooga Towns Fannin Union Murray Whitfield Walker Catoosa Ro ck da le Catoosa Montgom Dade Terrell Lee Jeff Davis Ben Hill Long Appling Turner McIntosh Tift Early Berrien Mitchell Miller Cook Dougherty Calhoun Atkinson Brantley Colquitt Irwin Clay Pierce Baker Glynn Early Ware Berrien Clinch Thomas Brooks Miller Camden Charlton Lowndes Echols Wayne Bacon McIntosh Pierce Baker Mitchell Seminole Grady Coffee Tift Lanier Decatur Worth 2011 same Atkinson Brantley Colquitt Cook Glynn Ware Lanier Seminole Decatur Grady Clinch Thomas Brooks Camden Charlton Lowndes Echols $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 - $60,478,017 2012 Significantly HIGHER $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 - $363,791,473 Meat supplies were slightly larger in 2011 but will be lower in 2012 2011 Projected 2010 Commodity 2012 Forecast BILLION POUNDS 11 vs 10 12 vs 11 PERCENT CHANGE Beef 26.41 26.30 25.08 -0.42% -4.86% Pork 22.46 22.78 23.21 1.40% 1.85% Total Red Meat* 49.18 49.37 48.58 0.38% -1.63% Broilers 36.52 36.84 36.11 0.87% -2.02% Total Poultry** 42.59 43.09 42.39 1.16% -1.65% Total RedMeat & Poultry 91.77 92.46 90.97 0.75% -1.64% Source: USDA-WASDE, January 2012 Report Continuing drought will keep hay prices high and limit expansion in the beef sector BEEF COWS THAT HAVE CALVED JANUARY 1, 2011 (1000 Head) 233 549 1476 446 237 880 694 600 180 727 488 Alaska 5.1 Hawaii 79 US Total 30865 Livestock Marketing Information Center Data Source: USDA/NASS 265 1610 1772 333 VT 360 1478 2036 5025 840 99 13 10 90 157 213 290 352 200 675 1865 1023 351 990 184 928 495 659 502 461 CT NJ DE MD NH 3 MA 6 RI 1.5 4 9 3.5 42 880 450 160 0 to 5,030 to 880 to 450 to 160 926 C-N-15 01/28/11 (12) (11) (13) (14) Record High Prices in 2011 MED. & LRG. #1 & 2 STEER CALF PRICES 500-600 Pounds, Georgia, Weekly $ Per Cwt. 150 Avg. 2006010 140 130 2011 120 110 2012 100 T O C L JU R 2010 AP JA N 90 Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC 01/18/12 Projected Prices 2012 and Beyond Source: USDA, LMIC and UGA COW-CALF RETURNS AND CATTLE INVENTORY $ Per Cow U.S., Annual Mil. Head 150 115 100 110 50 105 0 100 95 -50 90 -100 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 C-P-67 11/17/11 Livestock Marketing Information Center Data Source: USDA-AMS & USDA-NASS, Compiled & Analysis by LMIC Cow-Calf Returns Cattle Inventory Jan 1 Cost of Production ($/Cwt.) Cost of production will be higher but should be manageable for most $165.00 $155.00 $145.00 $135.00 $125.00 $115.00 $105.00 $95.00 $85.00 $75.00 Range of Expected Prices 2012 Expected Production Costs in 2012 Variable Costs Fixed Costs How Did Broiler Producers Fare in 2011 – What Does it Means for 2012? Broiler Prices Higher in 2012 on Production Cuts – Profits Much Improved if Feed Prices Moderate! Broiler Prices Higher in 2012 on Production Cuts – Profits Much Improved if Feed Prices Moderate! + $3/cwt. Milk Prices Remain High, Profits Improved With Reduced Forage and Feed Costs? $22/Cwt. 2011 2012 CROPS OUTLOOK Crop Agriculture – Can Increased Revenues be Repeated (Doubtful)? Catoosa Towns Fannin Rabun Union Murray Whitfield Walker Gilmer rs be Lumpkin Ha Gordon Chattooga Row & Forage Crops m ha White Stephens Pickens Dawson Hall Floyd Cherokee Bartow Franklin Banks Forsyth Jackson Polk Barrow Gwinnett Cobb Paulding Madison Lincoln Wilkes Ro ck da le Fulton $2.4 B 2010 Oglethorpe Walton DeKalb Douglas Elbert Clarke Oconee Haralson Hart Clayton Carroll Morgan Newton Taliaferro Columbia McDuffie Henry Fayette Warren Coweta Heard Pike Hancock Lamar Meriwether Glascock Baldwin Burke Jefferson Jones Monroe UP Big in 2011 Richmond Putnam Jasper Butts Spalding Troup Greene Washington Upson Bibb Harris Wilkinson Jenkins Crawford Talbot ee ch Bulloch Effingham Ch ery oo Candler Treutlen Macon att ah Laurens Bleckley Houston Marion Pulaski Schley Dodge Dooly Wheeler Stewart Webster DOWN in 2012 Emanuel Peach Taylor Muscogee Screven Johnson Twiggs Sumter Montgom Dade Evans Toombs Bryan Tattnall Chatham Wilcox Telfair Crisp Quitman Liberty Randolph Terrell Lee Jeff Davis Ben Hill Long Appling Turner Irwin Clay Dougherty Calhoun Worth Coffee Wayne Bacon McIntosh Tift Early Pierce Baker Berrien Mitchell Miller Atkinson Brantley Colquitt Cook Glynn Ware Lanier Seminole Decatur Grady Clinch Thomas Brooks Camden Charlton Lowndes Echols $30,000,000 - $100,616,482 $15,000,000 - $30,000,000 $5,000,000 - $15,000,000 $1,000,000 - $5,000,000 $0 - $1,000,000 • Prices Good in Almost all Georgia Row Crops on Tight Supply. • High Prices Have Cut Into Demand. • Will Feed Prices Improve for Animal Agriculture? Yes some! Irrigated Returns Above Variable Costs Comparison for Georgia’s Major Row Crops, 2011 and 2012 (Does not include land rent, custom work, hand weeding, or fixed costs) $/acre Returns Above Variable Costs, '11 Returns Above Variable Costs, '12 $800 $711 $700 $600 $500 $486 $536 $532 $507 $452 $374 $400 $290 $300 $169 $200 $183 $100 $0 Corn Cotton Gr. Sorghum Peanuts Soybeans Selected Georgia Row Crop Acreage, 2006-2011 3,000 - 10 + 80 - 100 2,700 Thousand Acres 2,400 + 70 2,100 - 85 1,800 1,500 1,200 900 + 270 600 300 0 2006 Cotton Peanuts 2007 Corn 2008 Soybeans 2009 Wheat 2010 2011 Grain Sorghum Corn Utilization Million bushels 14,000 12,000 1,410 1,600 10,000 8,000 5,000 6,000 4,000 4,700 2,000 Feed and Residual Ethanol Exports Food Seed and Other Industrial 11/12 10/11 09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01 99/00 98/99 97/98 96/97 0 U.S. Corn Supply and Demand Mil bu 50% 14,000 12,000 40% 10,000 30% 8,000 6,000 19.8% 17.5% 4,000 13.9% 13.1% 11.6% 12.8% 20% 8.6% 2,000 6.8% 10% 0% 0 Ending Stocks Production Domestic Use and Exports Stocks:Use Ornamentals (Green Industry) Summary Catoosa Towns Fannin Rabun Union Murray Whitfield Walker Gilmer m ha White rs be Lumpkin Ha Gordon Chattooga Stephens Pickens Dawson Cherokee Bartow Franklin Banks Hall Floyd Jackson Polk Paulding Barrow Gwinnett Cobb Madison Oglethorpe Ro c kd ale Fulton Lincoln Wilkes Walton DeKalb Douglas Elbert Clarke Oconee Haralson Hart Forsyth Clayton Carroll Morgan Newton Taliaferro Columbia McDuffie Henry Fayette Warren Coweta Heard Pike Hancock Lamar Meriwether Richmond Putnam Jasper Butts Spalding Troup Greene Glascock Baldwin Burke Jefferson Jones Monroe Washington Upson Bibb Harris Wilkinson Jenkins Crawford Talbot he e Muscogee Emanuel Candler Treutlen Bulloch Effingham Macon ery Ch att ah oo c Laurens Bleckley Houston Marion Screven Johnson Twiggs Peach Taylor Pulaski Schley Dodge Dooly Wheeler Stewart Webster Sumter Montgom Dade Evans Toombs Bryan Tattnall Chatham Wilcox Telfair Crisp Quitman Liberty Randolph Terrell Lee Jeff Davis Ben Hill Long Appling Turner Irwin Clay Dougherty Calhoun Worth Coffee Wayne Bacon McIntosh Tift Early Pierce Baker Berrien Mitchell Miller Atkinson Brantley Colquitt Cook Glynn Ware Lanier Seminole Decatur Grady Clinch Thomas Brooks Camden Charlton Lowndes Echols $0 - $1,000,000 $1,000,000 - $3,000,000 $3,000,000 - $6,000,000 $6,000,000 - $10,000,000 $10,000,000 - $61,751,425 • Economy and Demand Key • Flexibility in Retail • New Products also Key $586M 2010, down in 2011, stable in 2012 Environmental Horticulture Situation and Outlook Georgia 2012 • Key industry success factors: economies of scale, production and marketing of premium quality plants, expansion of export markets, use of appropriate growing structures and technology, wise water management. • Profit margins to suffer in 2012 as price competition puts squeeze on operating incomes albeit input and production costs continue to climb; lower pre-order quantities and numbers of orders. • Inelastic demand for environmental horticulture means a price increase is marketer’s and producer’s primary means of capturing revenue and re-growing business after the recession. What About 2012? • Animal prices higher, better profit potential. • Crop prices remain relatively high due to overall tight supply demand balance ,decent profits again but lower farm gate value. • Vegetable and fruits production value growth assuming… • 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 high enough if can make the crop or have the animal ? Deal with input and output variability! Policy Impacting Georgia Ag in 2012 (and Beyond!!) • Labor – Immigration reform state and federal? Changes to guest worker programs. What about E-VERIFY and Education to use??? • Exports/Imports – Free trade pacts? Savannah harbor deepening, Exchange rates. • Regulatory - Especially Animals – Fed. “Greenhouse gas” emissions, pesticide registrations, point source pollution permits, (GIPSA) contract production, other animal ag potential regulations. NEW Food Safety law. • Ag Economic Development – FED. Taxes, Ga. Sales Tax on Manf. And Ag Energy, 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 • FARM BILL 2012 – Tight funding, Concern – safety net for crop ag in Georgia, Conservation Funding, “crop” insurance and possible expansion to other products. • Water – Ga’s 10 regional water plans including S & D, CI Fed ruling, contingency plans, other. Thank you for attending!
