Projections of lower prices, rising production costs cast a pall over farmers' prospects

On The Farm

June 11, 2006|By TED SHELSBY

The corn is only a few inches tall on farms across Maryland, but agriculture officials already are pointing to signs that this will be a down year for farmers in the state and around the nation.

Net farm income in the United States is expected to total $56.2 billion this year, down 22.3 percent from last year, said Keith Collins, the chief economist at the U.S. Department of Agriculture.

"The coming year will present more of a financial challenge for U.S. agriculture than in recent years," Collins said.

While the government does not make farm financial projections for individual states, Norman Bennett, director of the USDA's Maryland farm statistics office, said local finances are expected to mirror the national trend.

Collins is forecasting lower prices for grain, milk and broilers, three of Maryland's four main agricultural sectors.

Looking at the national scene, which often tells the story of what's likely to happen in Maryland, Collins said, soybean prices are expected to average $5.50 a bushel this year, compared with $5.74 last marketing year.

He predicts lower prices for corn, another major crop in Maryland.

A big surplus of corn is expected to result in an average price of $1.90 a bushel this year, he said, down from $2.06 last year.

Poultry, a big business in Maryland, also is looking at an off year. Collins said wholesale broiler prices are expected to average 67 cents a pound this year, down from 70.8 cents last year.

He said concern about avian influenza has reduced the global demand for chicken.

Dairy farmers represent Maryland's third-largest agricultural sector, behind poultry and greenhouse/nurseries.

Milk prices, which have been fairly strong in the past two years, also are expected to slide this year. The USDA forecasts that prices will be down 10 percent from last year.

While major commodity prices are going down, farm production costs are on the rise.

Collins said that energy-related factors - items such as fertilizer, lime, fuels and electricity - and interest expenses increased by $6.5 billion nationally last year.

He foresees another $4 billion increase, or about 10 percent, for this year.

The U.S. Department of Energy projects that diesel and natural gas will cost 5 percent more this year. This would be on top of a 35 percent cost increase last year.

One bright spot in the USDA's forecast is horticulture, the second-largest and fastest-growing sector of Maryland agriculture.

"Fruits, vegetables, nursery and greenhouse products continue to provide good news for U.S. agriculture," said Collins.

Farm sales are expected to remain level this year at about $49 billion.

Seeding and weather

Maryland farmers are running slightly ahead of schedule in getting their seed in the ground this year, but many are sweating out the weather.

Corn planting is 99 percent complete, according to the USDA's Bennett. Soybean planting is 58 percent complete, above the 46 percent that is normally in the ground this time of the year.

"We're running a little ahead of normal on our major crops," Bennett said. He said the planting of some vegetables, along with watermelons and cantaloupes, has been delayed because of dry fields and hard ground.

The lack of rain is a concern among farmers.

"So far, I've been getting timely rains to keep things growing," said Melvin Baile, who farms about 750 acres in Carroll County. "But we need more rainfall. We are not looking at an abundant amount of moisture in the ground."

Bennett said much of Maryland is reporting below-normal rainfall this year.

"It is not a great concern at this time, but we could be in trouble this summer when things begin to heat up and we still don't get any rain," the official said. "It could kill us. There's not enough ground moisture to sustain crops at this time."

Heralding wings

Maryland farmers are benefiting from the national popularity of wings.

Americans consumed 15 billion chicken wings last year, according to the National Chicken Council in Washington.

The council traces the origin of the chicken wing back to 1964 at the Anchor Bar in Buffalo, N.Y.

That's when the bar's co-owner, Teresa Bellissimo, came up with the idea of cooking leftover wings in hot sauce as a late-night snack for her son and his friends.

The rest is history.

"The market exploded in the 1990s when McDonald's added wings to its menu," said Richard Lobb, a spokesman for the National Chicken Council.

The wing market has remained as hot as some of the flavorings used in making them.

The popularity of wings has been a boon to the poultry industry, Lobb said.

Once a product that the industry would sell for 30 cents a pound to get rid of, wings were recently quoted on a wholesale market at 84.5 cents a pound, a penny more a pound than regular chicken breasts.

Maryland ranks eighth among chicken-producing states.

Farmers raised 285 million broiler chickens in 2004, the latest year for which statistics are available. Sales total $628 million and accounted for 36 percent of total farm sales.

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