Growers react to change in global demand for crops

By COOKSON BEECHER

Capital Press

The value of agricultural production in Washington state dipped slightly last year, halting a previous upward climb that broke records for three straight years.

The 2008 value of agricultural production was $7.88 billion -- 5 percent below 2007's $8.32 billion, according to Washington state's National Agricultural Statistics Service office. The figures include government payments.

The numbers, which show the "raw" value of production but don't factor in the cost of production, reveal what a "tremendous economic engine Washington state agriculture is," said David Knopf, Washington state director of NASS.

The top five commodities were apples, milk, wheat, potatoes and hay.

Of the top five, two set records in 2008. The value of production for potatoes came in at $693 million compared with the previous high of $675 million set in 2007. The value of the 2008 hay crop hit $588 million compared with $498 million in 2007.

Claiming the highest value per harvested acre in 2008 was the non-storage onion crop, which came in at $10,794 per acre. Blueberries came in next with a value of $10,576 per acre. Coming in third were red raspberries at $9,593 per acre.

Ten of the state's crops ranked first in the nation in 2008: hops, spearmint oil, wrinkled seed peas, peppermint oil, apples, Concord grapes, sweet cherries, pears, processing carrots and red raspberries.

Although some commodities had stellar showings in 2008, some values have headed downward this year -- in most cases because of the global recession, said officials of agricultural organizations.

Whereas the 2008 hop value jumped to $253 million to set a record, besting the previous record of $137 million in 2007, the situation this year is far from rosy.

"The beer market isn't recession proof," said Ann George, manager of Washington Hop Growers Inc., referring to the main market for hops.

Last year, the price jumped in reaction to a shortage of hops in 2007. That led to arrangements in which growers signed front-loaded contracts and agreed to put in more acreage and invest in equipment.

As a result, there were 10,000 more acres in production, and thanks to the contracts, the growers were receiving good prices.

"But lo and behold, we soon ran headlong into the recession, and hops use wasn't what we thought it would be," George said.

The 2008 value of red raspberries came in at $92 million, more than tripling the $27.9 million value in 2007. Henry Bierlink, executive director of the Washington Red Raspberry Commission, attributed last year's high prices to short supply.

"It was a huge spike," he said, referring to the higher prices.

But Bierlink doesn't expect 2009 values to come in as high as 2008's.

"It will be more back in line with typical supply-and-demand values," he said.

Hay values, which include alfalfa, hit a record high of $588 million last year, compared with $498 million in 2007. Drex Gauntt, president of the Washington State Hay Growers Association, said it's a far different story this year.

"The credit crunch really slowed exports," he said.

But in the winter of 2007-08, there wasn't enough hay to meet export demand.

"They didn't want a repeat of that, so they bought a lot of hay in a big hurry," Gauntt said.

Add this year's credit crunch to low dairy prices, and hay prices had nowhere to go but down.

Gauntt said that in 2008, alfalfa was selling for $200 to $250 per ton, compared with prices that are shaping up to be from $100 to $130 per ton this year.

"The quantity will be about the same, but the prices will be lower," he said.

Karen Bonaudi, assistant executive director of the Washington State Potato Commission, said "acreage restraints" proved to be a strategy that helped increase potato prices in 2008.

The number of acres planted in potatoes in 2008 was 155,000 acres, compared with 165,000 acres in 2007.

Early this year, concerns about the recession had processors coming back and renegotiating already established prices and acreage with growers.

"Both went down as a result," Bonaudi said. "That really hit the growers hard."

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