Weak economy batters bottom lines; labor biggest cost

By MITCH LIES

Capital Press

USDA economists are projecting a substantial increase in net farm income this year. After 2009, Oregon farmers may need that to keep farming.

A newly released 2009 economic snapshot of Oregon agriculture shows net farm income at just under $563 million last year, down 41 percent from 2008, and the worst year in Oregon in seven years.

In 2008, Oregon's net farm income was $959 million.

Oregon's record high net farm income, set in 2004, was $1.3 billion.

Given the state of the national economy, the 2009 downturn wasn't particularly surprising, Oregon Department of Agriculture economist Brent Searle said. "But the magnitude of last year's net farm income drop is significant."

Among significant findings, last year was the first time in many years that the value of production decreased, Searle said.

Crop production fell to just over $3 billion, a decrease of about 13 percent. Livestock production dropped 12 percent to $923 million, with meat production falling 21 percent and dairy products falling even harder, at 26 percent. On the crop side, grain crops suffered the biggest decline, dropping 23 percent, largely because of low prices.

Expenditures also were down in 2009, according to the state Department of Agriculture figures.

"The expenses paid by producers for pesticides, fertilizers, fuel and electricity were down across the board," Searle said. "In this economy, farmers were more prudent in using these manufactured inputs."

Labor continues to be the biggest cost incurred by farmers, according to Searle. But even that was down, as total employee compensation dropped 2 percent.

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