Farmers and ranchers can expect higher input costs and more market and price uncertainty in 2019, but the year could offer some profit opportunities for well-prepared producers, speakers said Dec. 13 at a University of Idaho agricultural outlook seminar in Caldwell.
Ashlee Westerhold, UI extension area economist based in Twin Falls, said producers next year can expect higher interest rates, and increased costs for chemicals, fertilizer, fuel and labor.
On the labor side, Westerhold expects costs to increase by about 4 percent in trucking, 3 percent in general labor and 2 percent among equipment operators in 2019.
Seed, power and custom-farming costs should go largely unchanged, she said. But all input costs should be determined precisely and tracked because they influence the price the producer is willing to accept.
“Minimize your costs to maximize your returns,” Westerhold said.
Efficiency gains in many crop sectors have helped producers stay profitable or reduce losses amid mixed prices, speakers said. Onions, a major crop in southwestern Idaho and southeastern Oregon, exemplify the trend toward higher yields per acre.
Gina Greenway, visiting assistant professor of business and accounting at the College of Idaho in Caldwell, cautioned onion growers against “chasing onions as a cash crop.”
“Prices are down this year compared to last because of a near-perfect growing season that produced high yields,” she said.
Improved technology and irrigation practices have boosted yields. “We are getting better and better at what we do, but it hurts us because there is too much supply on the market,” Greenway said.
Lately, a 1 percentage-point increase in supply drops the price by 2.3 to 2.8 percent, she said.
Prices could rise from 2018 to 2019 on lower supplies, if only because this year’s growing conditions were “idyllic,” Greenway said.
Demand is strong. U.S. per-capita consumption of onions more than doubled since 1970, she said.
“We need to keep reminding people that great onions come from Idaho and eastern Oregon,” Greenway said. State-of-origin labels, such as those the Idaho potato industry has used successfully, could help.
Onion growers can maintain or increase profitability by knowing their breakeven price, fine-tuning their marketing plans, and managing pests and irrigation needs as efficiently as possible, she said.
Wheat could be a 2019 profit opportunity if producers manage costs, hit protein targets and focus their marketing strategies, said Jon Hogge, UI extension educator in Rexburg.