Printed on: January 10, 2013

Ag outlook? Uncertain

By Nate Sunderland
nsunderland@postregister.com

Agriculture prospects for the year ahead are uncertain, given an extended drought in southern and eastern Idaho and throughout the United States.

But many growers and producers are cautiously optimistic for 2013, provided the spring brings enough rain and demand for commodities remain high.

Local agronomists expect a solidly average year.

Wheat and barley growers are most optimistic. Demand and prices remained high for wheat and barley throughout 2012 compared to the flagging price of potatoes.

Perhaps the greatest uncertainty continues to be found in the cattle and dairy industries, which remain beset with high feed costs. Bovine producers are optimistic, however, that production costs and sale prices will remain steady this year or even show slight improvement.

Potato farmers are hoping for improved prices after a dismal sales year in 2012.

"I think prices are going to improve into next year, because it's pretty bad now," said Keith Esplin, the executive director for the Potato Growers of Idaho.

Ideal weather in 2012 caused higher-than-expected yields statewide, Esplin said.

Higher yields created a surplus and lowered prices.

Last year ended with potato prices between $8 and $9 per hundredweight for 70-pound Idaho Burbank and Norkotah varieties, according to the U.S. Department of Agriculture's Agricultural Marketing Service.

Prices were down sharply from the $14 to $18 per hundredweight at the end of 2011.

As a result of overproduction and low costs, farmers are expected to plant fewer potatoes in 2013 and increase acreage of wheat and barley.

Idaho wheat was at a premium price in 2012 as wheat growers elsewhere in the country and abroad were hit hard by drought, Idaho Wheat Commissioner Gordon Gallop said.

While drought conditions did hurt some dryland farmers in eastern Idaho, for the most part, the state's wheat crop went largely unscathed.

Locally, wheat varieties range from $7.50 per bushel to $8.30 per bushel, according to the Idaho Barley Commission.

Barley averages about $12.60 per hundredweight.

"Most of Idaho did pretty well, prices held strong and things look pretty positive going into next year," Gallop said.

Crops in trouble elsewhere in the country are keeping prices up, he said.

Hay growers had another good year, although not as good as the record prices of 2011.

The price of hay averaged $190 to $230 per ton, according to the Idaho Hay and Forage Association -- down from the $240 to $260 per ton at the end of 2011.

Despite the good price, association President Will Ricks doesn't expect increased hay acreage statewide, due to better returns and lower input costs of growing wheat.

Ricks said he's concerned for dryland farmers who were unable to produce a successful crop in 2012.

"It's pretty hard to produce dry-farm hay without rain," he said. "But if it rains in the spring, it's likely the price and demand for hay will go down."

High grain and hay prices are good for Idaho growers, but the resulting feed costs have put a significant dent into the profits of Idaho cattlemen.

Cattle producers still are faring well, however, because of the high cost of calves and ready-to-slaughter cows.

"The beef industry is poised for another good year, but that's contingent on this drought," said Richard Savage, past president of the Idaho Cattle Association. "We've been fortunate in Idaho, because irrigation helped us make it though another dry year."

Savage's concern is that a dry 2013 would drive feed costs higher, which could cut even more into cattlemen's profits.

Idaho feed lots are struggling due to the high cost of buying calves and feed. Cow and calf ranchers are faring better as most grow their own feed. Nationwide, cattle herds remain small, which has kept demand and prices high.

Savage expects Idaho's 2013 herd size and demand to remain about the same as last year.

"The demand is staying pretty high," Savage said. "If we can have a year where the whole country gets moisture, we just might to set some records."

While high feed prices are a major concern for Idaho's dairy industry, there may be a light at the end of the tunnel in 2013, said Bob Naerebout, executive director of the United Dairymen of Idaho.

"We'll be making money this year, but margins will be tight," Naerebout said. "The supply of milk in Idaho is still showing a positive growth."

The supply of Class III milk, used to produce cheese, has grown by 2.5 percent since 2011.

Idaho milk production has grown slowly, but steadily, since 2009. Class III milk prices are averaging about 18.50 per hundredweight, Naerebout said.

The biggest boon for Idaho dairymen is the new Chobani Yogurt factory that opened in Twin Falls last month. The factory already is affecting milk prices in a positive way as other Idaho dairy factories adjust prices to compete.

"Producers are cautiously optimistic," Naerebout said. "There are some profits to be made in the futures market, but there are a lot of different factors that could still change where the market is."