Posted: Thursday, October 11, 2012 12:00 PM
Economists say rapid rise in prices may propel agriculture above last year
By SEAN ELLIS
BOISE -- Because of a recent surge in ag commodity prices, the state's record for total farm gate receipts in a calendar year will be challenged in 2012, a scenario that seemed unlikely only a few months ago.
The record of $7.4 billion was set last year and was far above the previous record of $6.22 billion set in 2008. Until recently, University of Idaho agricultural economists said that while 2012 would be a good year for Idaho's farmers and ranchers, it was doubtful that record would be challenged this year.
As recently as July, economists thought it was unlikely, said Paul Patterson, one of the UI economists who track the state's total farm revenue numbers.
"But prices just keep coming up," he said. "Prices have gone up so much the last few months that ... it's looking more and more likely."
Idaho's dairy industry accounts for the largest share of the state's total farm revenue but that sector's contribution will dip this year.
Unless prices change drastically the last few months of the year, "We're looking at an increase in production but a decrease in prices, with total value down (about $150 million)," Patterson said.
However, several Idaho crops are on track to set records for total revenue this year and could make up the difference.
Total wheat production in Idaho is down 15 percent from last year, but prices have risen significantly and Patterson said it now looks like wheat, Idaho's No. 2 cash crop, will surpass last year's record performance of $766 million in sales.
"I think it's possible because of sustained high prices," Idaho Grain Producers Association Executive Director Travis Jones said. "Wheat production is down, but prices have stayed pretty robust."
Potatoes, Idaho's top cash crop with a record $912 million in revenue last year, should narrowly surpass that total this year, Patterson said, and it's a lock that the state's dry bean and barley crops will set records, with sugar beets coming close.
Prices for onions, the only main Idaho crop to see a drop in total revenue last year, are up significantly.
Hay is the only major Idaho crop that looks like it will experience a decline in total revenue this year, Patterson said, but even that commodity "seems to be surging pretty strong recently."
Patterson said cattle and calves, the state's No. 2 agricultural commodity as far as farm gate receipts go, will come close to last year's record $1.47 billion total.
"I agree," Wyatt Prescott, executive vice president of the Idaho Cattle Association, said. "As far as our industry is concerned, I don't see cash receipts being down from last year."
But Patterson points out that expenses have risen significantly this year and it remains to be seen whether Idaho agriculture's record of $2.64 billion in net farm income, also set last year, will be challenged in 2012.
"Production expenses have gone up," he said. "That's taken the shine off of some of these crops."