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Farm income outlook for 2005 not good, not too bad

By Brad Haire
University of Georgia

Net farm income for Georgia farmers in 2005 probably won't be as good as in 2004. But it should be a little better than earlier this decade, according to the University of Georgia 2005 Georgia Farm Outlook and Planning Guide.

Georgia farmers can expect to get about the same prices in 2005 as they did in 2004 for certain commodities. But prices for others could be worse, according to the report compiled by the agricultural and applied economics department of the UGA College of Agricultural and Environmental Sciences.

Peanut demand

Peanut farmers can expect early contract prices to be lower than the $400 per ton they got in 2004, said Nathan Smith, a peanut economist with the UGA Extension Service.

"When prices for other commodities are low," he said, "peanut prices tend to go lower, too."

This is now the fourth peanut crop under the federal peanut program that replaced the old quota-based system. Prices have remained stable under this program, Smith said, due mostly to the steady balance between supply and demand.

Georgia planted about 620,000 acres in 2004. Due to forecasted lower prices in other crops, farmers may plant more peanuts in 2005, Smith said. This would increase the supply and possibly lower prices.

Demand for U.S. peanuts continues to grow, he said. It's expected to be about 5.5 percent higher in 2005. U.S. consumers used 3.9 billion pounds of peanuts in 2004.

Cotton questionable

Georgia cotton farmers had a good crop last year, despite being battered by tropical storms. The state's farmers picked around 1.8 million bales. But the United States had a record year of 22.8 million bales. China produced a large crop, too, about 30 million bales. (A bale is roughly 450 pounds of cotton lint.)

Cotton prices now are about 40 cents per pound, Shurley said. They could reach as high as 50 cents per pound in 2005. But if the world produces another large crop, they could drop to around 30 cents.

"Because of all the stock left over from 2004," said Don Shurley, a cotton economist with the UGA Extension Service, "it may be midsummer before a clearer picture can be made on what prices will be around harvest."

Two of every three bales of cotton grown in the United States will have to find a foreign buyer, Shurley said. Georgia farmers will have to produce cotton the world wants to buy.

Stable cattle

Georgia cattlemen should have another good year in 2005, said Curt Lacy, a UGA Extension Service livestock economist. Good U.S. beef demand coupled with "snug" cattle supplies should keep prices steady to a little higher for cattlemen.

Prices should average around $1.05 per pound for Georgia steers around 500 pounds and 92 cents per pound for feeder steers around 700 pounds.

"These prices assume we don't have any major market disruptions (such as a U.S. case of bovine spongiform encephalopathy)," Lacy said.

Soybeans sink

A large soybean crop in 2004 has led to a big supply. Because of this, prices are expected to be lower in 2005.

Prices this year will probably be around $5.06 to $5.15 per bushel, according to the report. Soybean prices in early 2004 soared close to $10 a bushel in some parts of the country. Prices in 2005 will depend greatly on how South America's crop turns out.

A potentially devastating soybean disease, Asiatic rust, showed up in the U.S. Southeast in late 2004, too late to hurt the crop. But farmers and buyers are waiting to see how the disease will affect the 2005 crop.

According to the report, borrowing rates to finance farmland and fixed asset investments will remain good for farmers in early 2005.

Details about these and other Georgia crops can be found in the outlook guide next week at www.agecon.uga.edu.

(Brad Haire is the former news editor with the University of Georgia College of Agricultural and Environmental Sciences.)

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