Moderate growth in 2003 farm economy anticipated

<a href=www.tuscaloosanews.com>Read more By GARRY MITCHELL Associated Press Writer March 23, 2003

Alabama's farm economy could grow at a moderate rate this year, thanks to better prices and higher productivity in some crops, agriculture experts say.

With spring planting picking up, there are factors that could alter that forecast: fuel costs, foul weather and drought threats and, as always, fluctuations in the U.S. economy.

Despite the unpredictable pressures, poultry growers in the state's largest farm industry produced more than 1 billion broilers in 2000 for the first time and have kept up that production pace, says Auburn University poultry expert Eugene Simpson.

He says the actual buyers' price to growers has not changed much, but poultry growers are improving their finances by refinancing mortgages using the record low interest rates.

Lisa Lake and husband Steve run S & L Farms in Cullman. She said they refinanced their mortgage on their four hen houses last year.

"We got a really good rate. We keep the same payment, but paid down the principal," she said.

Still, they must budget for higher fuel prices driven up by political upheavals in Iraq and Venezuela.

The Lakes have about 35,000 birds and run into high electricity bills keeping them cool in Alabama's summer heat.

"It's a little bit of a scary time for growers," she said, because the market is flooded with poultry.

Alabama's total farm receipts for 2001 totaled $4.25 billion, the most recent figures available from the government. That jumps to $4.83 billion when forestry is included.

"I think we will see moderate growth, say 2 to 4 percent," said agriculture economist Walt Prevatt at Auburn University, giving an outlook for the 2003 crop.

He noted that all of the top five commodities have some potential to improve in price and productivity this year. Broilers are 41.5 percent of total farm and forestry receipts; forestry is 14.9 percent; cattle and calves 7.5 percent; eggs 5.5 percent; and greenhouse and nursery crops 4.6 percent.

Cotton is number six at about 4.5 percent.

Cotton expert Bob Goodman, another Auburn economist, believes a U.S. war with Iraq will probably not have a lasting impact on cotton exports, "but we will see some drag on the cotton market until the situation stabilizes."

The outlook for cotton exports is improving, with the decline in the dollar, he said, because a weak dollar makes U.S. exports cheaper on the world market.

"We need to sell about two-thirds of our cotton overseas now, since most of the domestic market is out of business due to the lower labor costs of overseas competitors," he said. "I am positive about the farmer's chances for a profitable crop in 2003, for cotton and peanuts."

And he expects gains in peanut production in southwest Alabama.

"With the demise of the quota system, a large increase in peanut production has occurred in Baldwin, Escambia, Monroe and Mobile counties," he said.

Goodman expects this trend will continue for several reasons.

"There are some soybean producers there as well, and if the weather cooperates they should do OK, but there will not be a return to large acres of soybean production in Alabama for a very long time," he said.

Soybean prices are low right now, and will not sustain profitable production in most of the state.

Nationally, net farm income is expected to rebound this year, after a dramatic one-year, $13 billion decline in 2002, according to an economic report by the University of Missouri's Food and Agricultural Policy Research Institute, or FAPRI.

Prices for pork and beef are expected to rise until 2005, when reverses in the regular livestock cycles will bring price declines. Both hog and cattle prices are expected to end the decade at above current levels.

In Alabama, Prevatt said farm production costs will rise this year.

"I am hopeful they won't rise faster than gross revenue," he said. "When higher production costs are factored in, net farm income will probably be flat to a slight improvement. Now add in the farm bill payments to farmers and net farm income should show some improvement."

However, in comparison with other major farming states Alabama does not receive large levels of government payments, he said.

Also, if broiler production increases and improvements are realized for cattle and calf prices this year, this will likely give a boost to total farm receipts and net farm income, assuming production costs do not outpace improvements in revenue, according to Prevatt.

The USDA collects information from growers on their income each spring. Those surveys are currently being done. The report on planting intentions will come out March 31, giving the first hint of the 2003 crop size.

U.S. price projections for 2002-03 row crop marketing season are all improved over 2001-02, according to Herb Vanderberry of the Alabama Agricultural Statistics Service. Cattle, broiler, and egg prices are also projected higher for this year, he said.

"But until we have some idea of crop sizes and livestock production during '03, it would be anybody's guess on net farm income," he said.