THE CENTRALIA CHRONICLE – JORDAN NAILON
Quarterly agricultural reports compiled by Northwest Farm Credit Services have followed the bell cow home in order to provide a look back at 2017 and a glimpse forward to the year to come. While most commodities are fetching fair prices, others are languishing like legumes too far from the manure lagoon.
Cream of the Crop
Beef farmers are going to be eating high on the hog for the foreseeable future thanks to a confluence of positive circumstances. Calf prices remained high through the fall, and despite continued growth in cattle and beef stock, hamburger hungry markets at home and overseas promise to provide plenty of propellant for prospects.
Haymakers continue to see green six months removed from bucking season thanks to strong export demand. Alfalfa exports have increased by 227,000 metric tons since last year and Saudi Arabia is the fastest growing market, representing an increase of 106,000 tons from a year ago. While the majority of that growth has occurred in the south, here in the Northwest a growing Chinese market is turning grass into gold. Those exports have grown by 93,000 since last year, while domestic dairy hay stocks are secure in the face of falling milk prices and decreasing demand. The 12-month outlook indicates that alfalfa and timothy growers will remain slightly profitable.
Visitors down at the wharf may have noted something smelling extra fishy lately. As it turns out, that’s just the smell of money. Fish markets are projected to keep reeling in profits in coming months thanks to a “favorable consumer perception of Wild Alaskan pollock.” A reduction of Russia’s total allowable pollock catch is also expected to help keep fish prices floating on alright.
Lumberjacks are making more than wooden nickels with their harvest thanks to strong prices and consistent demand. Inventories were depleted due to a wet spring and severe winter weather, along with summer fires. Those conditions led to inflated log prices in 2017 that are expected to remain up in the treetops in 2018.
Greenhouse and nursery markets are keeping warm over winter thanks to an evolving home landscaping market and a strong U.S. economy. New buyers have a preference for smaller, low-maintenance yards, and Americans in general are paying for more professional landscape care. A depleted labor force is the only thing constraining industry growth at the ground level.
The apple crop for 2017 is believed to be the second largest on record. Smaller crops picked on the East Coast, and in Canada, Mexico and Europe, and are expected to help drive up demand for Washington apples. Profits are expected to remain strong, especially for growers with newer varieties that match domestic taste. Some older apple varieties, however, have seen their bottom line turn brown.
Onion growers have been able to wipe their tears from a year ago thank to prices that remain well above last year’s average. Fewer acres were planted this year and a shorter growing season limited production. Medium-sized onions may languish a bit due to adequate supply but jumbo onions and larger will continue to fetch high prices.
Winemakers and grape growers in Washington both have reason for a toast. Last year’s grape harvest was slightly less than 2016 but that was due to smaller, more desirable clusters. Vinters are encouraged by the new tax bill, which will grant tax rebates on the first 750,000 gallons produced. That news is buffered by the fact that wine sales, especially directly to consumers, remain well lubricated.
Bottom of the Barrell
Dairy returns are expected to tank this quarter with an anticipated reduction of $2 per cwt from December to February. Those losses represent a 13 percent decrease. A river of skim milk powder has flooded the European and Canadian markets but drought in New Zealand and lowered Chinese cheese tariffs my help domestic milk markets find a balance. However, the 12-month outlook still anticipates unprofitable returns.
Cherry pickers were too busy last year and the result was the pits for owner/operators. That crop swamped the market with a record cherry harvest.
At least two-thirds of that harvest fetched no profit last year, but projections indicate that cherries that hit the market before July 4 will do well this year. Over the last 30 years cherry orchard acreage has increased, including 1,114 new acres in 2016.
Staying in the Silo
Potato markets are all mashed up due to uncertainties in production. Last year’s Northwest crop decreased by 6.6 percent due to fewer planted acres and shorter yields. The 12-month outlook expects that potato operations will fetch a return just slightly above the cost of business for the 2017 crop thanks to limited supply.
Sugar beet growers turned in their second largest crop on record in 2017, trailing only 2016 in total pounds despite a late start to the growing season. The sour side is that those beets were lacking in sugar content and profitability is expected to dip somewhat. Growers are expecting slight profits in 2018.
Wheat and other pulse crop markets have been taking a threshing recently due to an unexpected import tariff on peas, lentils and garbanzo beans imposed by India. Those crops are all grown in rotation with wheat and the reduction in exports is likely to disrupt overall profitability.
Low wheat prices are expected over the next year due to record world production and already deep stocks.
The pear market has turned all mushy due to a harvest of just 17.1 million boxes in 2017, the smallest crop since 2006. While prices are up for Bartlett and Bosc crops, overall shipments are below the five year averages and price point pressures are expected if shipments don’t increase soon.
Many farmers are taking acres out of pear production and the long term outlook expects only slight profits in the industry.
Northwest FCS is a large financial cooperative that provides financial services to farmers, ranchers, agribusinesses, commercial fishermen, timber producers, rural homeowners and crop insurance customers in Washington, Oregon, Idaho, Montana, and Alaska. Additional information, including more crop reports, is available online at northwestfcs.com.
Posted By: Jordan Nailon / email@example.com Jan 26, 2018
Photo: The Chronicle / File Photo