Don Shurley Department of Agricultural and Applied Economics The University of Georgia

1. Don Shurley Department of Agricultural and Applied Economics The University of Georgia Georgia Farm Bureau February 10, 2011 Macon, GA

2. Financial Condition- Cesar Escalante Inputs Situation- Forrest Stegelin Cattle and Feed- Curt Lacy Dairy- Tommie Shepherd Fruit and Vegetables- Greg Fonsah Cotton- Don Shurley Grains and Soybeans- Nathan Smith Green Industry- Forrest Stegelin

3. AgribusinessEconomy Georgia’s Largest Sector

4. 2009 Total Farm Gate Value = $11.3B First Decline in Decade! - 2010 – Up significantly, across the board! $313,000 - $20,000,000 $20,000,000 - $45,000,000 $45,000,000 - $80,000,000 $80,000,000 - $200,000,000 $200,000,000 - $443,441,000

5. What About 2011?Farm Gate and Immediate Impacts -Continued high prices for crops, but variability also high -Input Costs are Rising Also Fuel, Fertilizer, Feed, Land Rent -High prices and optimism starting to translate in improved durable input purchases -Increased production means increased processing $313,000 - $20,000,000 $20,000,000 - $45,000,000 $45,000,000 - $80,000,000 $80,000,000 - $200,000,000 $200,000,000 - $443,441,000

6. Other Major Factors That Continue To Impact GA Agriculture in 2011 and Beyond Water – policies impacting supply and demand, Tri-state water, regional water plans. Labor – Immigration policies, changes to guest worker programs. Exports/Imports – Free trade pacts, Savannah harbor deepening, value of the $ relative to other currencies. Regulatory – “Greenhouse gas” emissions, pesticide registrations, point source pollution permits, contract production, other animal ag potential regulations, food safety. Ag Economic Development – Ga. Tax council recommendations and actions including economic development incentives. Fed – economic development/transportation funding Energy Policy – GHG regulations, Cap and Trade, Food/fuel debate & tax and development incentives, mandates, import restrictions for bio and alternative fuels. Economic Recovery- family incomes, demand for green industry. FARM BILL 2012 – new congress, tight funding , Ga. Congress and Senate changes on appropriations/ag committees. Concern – safety net for primarily crop ag in Georgia, “crop” insurance and possible expansion to other products.

7. Relatively Weak Dollar Continues to Help Exports (Cotton, Meats), Hurts Imports Long Term U.S. Dollar Index – 1990 to Present

8. Petroleum Prices - Steady Climb Again?

9. Crop Agriculture • Concentrated in south and east GA. • 60% of the total value is in 2 crops- cotton and peanuts • Record High Prices in Almost all Georgia Row Crops • Record High Feed Prices for Animal Agriculture! $0 - $1,000,000 $1,000,000 - $5,000,000 $5,000,000 - $15,000,000 $15,000,000 - $30,000,000 $30,000,000 - $79,313,000

10. Tight Stocks Since ’07 in Feed Crops Despite Large Crops US Corn Supply and Demand

11. More Corn Used for Ethanol as Energy Act Mandates Million bushels Source: USDA, 1/12/2011

12. Soybeans – Global Demand Keeping Supply Tight US Soybean Supply and Demand

13. Cotton- World and US Ending Stocks 53.0% 50.3% 49.2% 55.0% 55.5% 57.7% 53.6% 49.0% 48.4% 37.2% 37.3%

14. US Cotton Acres Planted, 2000-2010.

15. Peanut Ending Stocks Declining, Prices Highest Since Quota Days 840 700?

16. Wheat – Reduced Production in US and World Help Wheat Prices US Wheat Supply and Demand

17. Non-Irrigated Row Crops Georgia, Net Return Per Acre, 2011

18. Irrigated Row Crops Georgia, Net Return per Acre, 2011

19. Expect some U.S. crop acreage shifts in 2010 as well as in Georgia

20. Beef, Dairy, Pork & Poultry Outlook Beef/Dairy/Pork/Equine Broilers/Eggs $1.2B 2009 $5.2B 2009 $0 - $3,000,000 $3,000,000 - $5,000,000 $5,000,000 - $10,000,000 $10,000,000 - $15,000,000 $15,000,000 - $39,310,000 $0 - $1,000,000 $1,000,000 - $10,000,000 $10,000,000 - $40,000,000 $40,000,000 - $100,000,000 $100,000,000 - $340,554,000

21. Meat supplies will be down slightly in 2011 Source: USDA-WASDE, January 2011 Report 2011 Beef Cattle Winter School Update

22. Declining cow numbers reflect lack of profitability in the sector

23. Calf Prices Starting Out Higher, Current Futures Indicate Substantially Higher Prices in 2011 Livestock Marketing Information Center Data Source: USDA-AMS, Compiled & Analysis by LMIC

24. Projected Prices 2011 and Beyond Source: USDA, LMIC and UGA

25. Projected Profits for 2011 Not very pretty Fertilizer and feed costs will be the differences in profits (or lack of). Longer-term producers are going to have look at increasing forage/less feeding.

26. Will Broiler production respond to high feed cost/ tighter profit margins? • Broiler production up 3% in 2010 • Forecast to be about same in 2011. • Feed cost puts late year in question.

27. Broiler Prices Tract 2010 First Half ’11 Improved Prices Last Half - Feed Key to Profits! Total Value Increased in Georgia

28. Dairy Price Relatively High but Profits Slim

29. Livestock Summary • Higher sales prices on reduced supplies and improved demand. • Higher input costs • Fertilizer/pasture costs for cattle • Feed for beef, dairy and hogs • Profits will require some effort and management. • Risk management will be key.

30. What About 2011/12? • Animal prices remain high, some opportunity, profits depressed because of feed and input cost • Crop prices remain high due to tight supply demand balance. Profits good • Vegetable and fruits production value growth • Ornamental markets stable $0 - $20,000,000 $20,000,000 - $45,000,000 $45,000,000 - $80,000,000 $80,000,000 - $200,000,000 $200,000,000 - $316,814,000 Bottom Line – returns higher, profits? Deal with input and output variability!

31. Thank you. Questions?