Consultant says milk, wheat and hay return to normal prices after boom

By DAN WHEAT

Capital Press

The value of Washington's agricultural production dropped 8 percent in 2009 from the year before, according to the National Agricultural Statistics Service.

Including government payments to farmers, farms produced $7.27 billion in commodities compared with $7.92 billion in 2008 and a record $8.35 billion in 2007, NASS said.

"The global recession continued to impact prices of our commodities last year, but there's room for optimism," Dan Newhouse, director of the state Department of Agriculture, said in a news release.

"The strength of our agriculture economy still lies in the high quality and diversity of products our growers and ranchers bring to market," Newhouse said. "As I saw during a recent trade mission to China and Vietnam, Washington's products still enjoy strong demand throughout the world."

David Knopf, director of the Washington field office of NASS, said the drop in value is partly due to the recession but also caused by market supply and demand. Some items were in short supply in 2007, which ran up prices, he said.

Desmond O'Rourke, retired WSU ag economist and private consultant, said milk, wheat and hay, which experienced the largest drops in value, all returned to more normal values from price spikes.

He said milk and wheat were in short supply worldwide, which caused their prices to go up in 2007 and 2008. High milk prices caused hay producers to charge dairies more for hay, O'Rourke said.

Milk dropped $316 million from 2008 to 2009. Milk is highly socialized, with larger producers living off government programs and small dairies always at about break-even, O'Rourke said.

Wheat dropped $149 million and hay dropped $140 million. Cherries fell $74 million because the record 2009 cherry crop was a bust in harvest and prices. Potatoes dropped $47 million, eggs $30 million, nurseries $29 million and cattle $24 million.

Wheat, at $596 million in 2009 value, should increase to around $750 million for 2010 because of higher prices, O'Rourke said.

Apples continued as the state's No. 1 ag commodity in value for the fifth year in a row at $1.47 billion, up 14.4 percent from 2008. Apples should continue to increase because of shortages in Michigan and Europe, O'Rourke said.

Milk was No. 2 at $684 million, potatoes were third at $645 million, wheat was fourth at $596 million and cattle and calves were fifth at $472 million.

The top five commodities had a combined value of $3.87 billion, or 55 percent of the 2009 value, excluding government payments.

Looked at by commodity groups: field crops at $2.45 billion were down 12 percent from 2008; fruits and nuts at $2.09 billion were up 5 percent; and livestock at $1.52 billion was down 20 percent.

Record high values were set in 2009 for hops, grapes, sweet corn, mint oil, dry edible beans, wrinkled seed peas, alfalfa seed and apricots. Hops rose to $264 million, grapes were at $210 million and sweet corn topped $173 million.

Non-storage onions had the highest value per harvested acre at $11,063 per acre in 2009. Next was apples at $9,628 per acre followed by hops at $8,917 per acre.