Posts Tagged: economy

Ya gotta eat

The slogan for Rally's burger stand, "Ya gotta eat," is probably soothing to American farmers. As Associated Press writer James Prichard wrote in an article about agriculture in the ailing economy, "While people will put off buying houses and cars in a bad economy, they still need food."

The story said the economic downturn could even boost income for food producers who know how to take advantage of the situation.

For the article, Prichard spoke to the director of the UC Agricultural Issues Center, Dan Sumner, who pointed out that the agricultural sector isn't immune to the economic recession.

He said consumers are likely to cut back on goods they perceive as more dispensable (wine? asparagus? organic Saturn peaches?) while continuing to purchase basic agricultural products containing corn, soybeans, wheat, butter or milk. Also, because of the recession, credit is harder to come by. Many growers and producers borrow money to pay for seeds or equipment, or to operate or grow their businesses.

The article included a link to the UC Ag Issues Center Web site.

 

Saturn peaches are more expensive than traditional varieties.

Dairy operators crying over surplus milk

California's dairy operators are struggling with a bleak bottom line as the commodity price for milk has tumbled. According to a story over the weekend in the Fresno Bee, milk prices dropped 50 percent in the last six months, from about $20 for every 100 pounds to about $10. The overall cost to produce milk in California is estimated at $19 per 100 pounds, the story reported.

Bee ag reporter Robert Rodriguez spoke to UC Davis dairy specialist Leslie "Bees" Butler for his perspective on dairies' dismal numbers. He blamed the drop in milk value to dramatic changes in the export market. Australian producers are recovering from a recent drought that had boosted world milk price, the U.S. dollar is stronger and the global recession has reduced demand.

"The export market was booming, literally booming, expanding by 30% to 40%," Butler was quoted. "But all of a sudden that market has dried up."

Milk demand in the U.S. is also declining, Rodriguez wrote.

"And it's not like we are talking huge percentage points. But it does not take a lot to change dairy prices," Butler was quoted.

Dairy cow.

Sierra Nevada Conservancy funds halted

In another sign of our dire economic times, grant funds allocated by the state of California's Sierra Nevada Conservancy came to a screeching halt last month. The agency announced funds made available after the passage of Proposition 84 will no longer be dispersed. The November 2006 proposition had authorized the state to issue bonds for the protection and restoration of rivers, lakes and streams and other natural resources.

One of the projects losing its funding would have collected and analyzed data on three riparian/meadow monitoring sites in the South Ash Valley area of Lassen County, where landscape junipers were being removed to assist in the restoration of sagebrush steepe habitat, according to an article in the Lassen County News.

The article quoted a Sierra Nevada Conservancy press release that noted UC Cooperative Extension's involvement in the project.

“The University of California Cooperative Extension, Lassen County and faculty at the University of California, Davis have assisted in developing the monitoring methods for this project and will act as the quality control. Information gathered from these sites will provide valuable insight into the effectiveness of the restoration efforts throughout the sagebrush steepe ecosystem," the story said.

The state asked all grantees to stop work on their projects until further notice.

UC's Dan Sumner boils down 2009 ag outlook

Last year, agribusiness and most business sectors road an economic roller coaster. The 2009 outlook is tough to forecast, according to a Sacramento Business Journal article that used the director of the UC Agriculture Issues Center Dan Sumner as its primary source.

The bulk of the article is blocked on the Business Journal's Web site, accessible, it says, only to paid subscribers. But the Internet makes it available elsewhere, such as on the Wichita Business Journal's Web site (an example of the media's own economic conumdrum).

In the article, written by Celia Lamb, Sumner commented on tree nuts and wine, which he said could be vulnerable if consumers decide to cut back on luxuries, and grain markets. Corn, he noted, was priced at $3.98 per bushel in January 2008, and rose to $5.47 in June. By November, it fell to $3.94 per bushel.

“Feed prices look like they’re going to be much more moderate (in 2009) than we would have thought,” Sumner was quoted. “That is good news for California, (because) we’re big in the dairy market and we’re not as big in the grain market.”

Sumner offered some good news to the agriculture industry in general.

“I’m thinking net farm income will hold up in agriculture better than the rest of the economy,” he was quoted.

Farms not suffering like banks during economic crisis

The country is facing economic crisis, but experts say farms won't have trouble securing loans, according to a story published today in the California Farm Bureau's AgAlert newspaper.

"Unlike financial institutions that have been devastated by subprime mortgages, the agricultural lending sector has remained on solid financial footing because of its strict lending practices," reporter Ching Lee wrote.

For the story, Lee spoke to UC Davis agricultural economist Steven Blank. He said the tighter lending standards for farmers have their roots in the agricultural recession of the 1980s. Inflation in the '70s had pushed farmland values so high that many producers borrowed against their equity to buy more acreage to expand their operations. When farmland values dropped as much as 60 percent in a couple of years, many growers had gone so far into debt that their farm incomes were no longer sufficient to meet their loan payments.

"It was just like the foreclosure problems we have now, except it was in farms," Blank was quoted.

The resulting lending practices -- requiring farmers to answer questions about their assets, production costs and crop plans, provide the financial details of their operations and show proof that they can pay off their debts -- have insulated the farm credit market from the Wall Street woes that have tightened the nation's credit market, the story said.

Blank told the reporter that, despite the gloomy overall economic forecast, he is optimistic that, in a couple of years, "we'll be right back to normal."

"Being in agriculture is a great place to be in down times because people are going to eat," Blank was quoted. "Even if the economy is a little soft, we're all going to keep getting hungry. I think agriculture in many ways is a bit more of a safe harbor than other parts of the economy in that regard."

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