SouthPoint

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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed’s Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


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04/14/2014


Our Bread and Butter

It’s spring, which means warming weather, getting out the gardening tools, and convening the semiannual meeting of the Atlanta Fed’s Agriculture Advisory Council, which represents diverse agriculture and agribusiness interests across the Southeast.

Prices are always a topic of conversation at council meetings. This meeting was no exception, and here are some examples of what we heard:

  • Fertilizer prices are up.
  • Feed prices are down from last year’s highs.
  • Fuel costs have been stable over the last year.
  • Equipment and seed costs are up.
  • Beef prices are up, and some producers are considering increasing herd size because of favorable prices and lower feed costs.
  • The value on the very best farmland is holding up, but farmland prices may see some corrections, with the biggest changes expected on marginally productive land.

Citrus greening is reducing the supply of Florida oranges, and growers continue to seek ways to mitigate the effects of the disease. Even though costs for products that help fight the disease are up, growers are saying, “If you think it works, you do it.” Growers hope that new research funding included in the recently approved farm bill will help find a solution, but concern also exists that as production declines, processing infrastructure will be lost, which may make it challenging to expand in the future.

Foreign markets have also affected growers. For example, cotton prices are in flux as a result of China’s pricing policy, while dairy prices are enjoying an uptick because of China’s increased purchases. Poultry producers expect this year to be a good one. The poultry industry is setting export records, and producers are saying exports represent future growth.

Finding labor remains difficult for most producers, and the problem is no longer just finding the numbers they need but increasingly finding those with the necessary technical skills as well. Producers are encouraging local junior colleges to offer technical programs for farm workers: “We need fewer but better-educated laborers,” one source said. There is also a growing need for data-management skills. Many growers will outsource data management/analysis to big companies specializing in that area.

Council members agreed that the outcome of the newly signed farm bill remains uncertain as the details are worked out, but they anticipate large farm producers will have to significantly restructure their businesses.

Another challenge is coming from the consumer side, as buyers require unprecedented amounts of information about health and wellness and sustainability processes from agriculture producers. Advisory council members acknowledge that technology makes it possible to supply this information, but the group recognized the need for agriculture producers to have a seat at the table when discussing new requirements.

As the meeting drew to a close, we went around the table one last time, and these comments are among what we heard:

  • “We will get more efficient.”
  • “There will not be a lot of inflation in agriculture in the next year or two.”
  • “Agriculture will go through another cycle of de-peopling,” but “…as the labor required to produce is decreasing, value and next-step processing is not shrinking.”

As I reflect on all I heard that day, I know technology will continue to play a big role in agriculture production, and its use is expanding every day. I also know from talking with our council members that good old-fashioned tenacity, know-how, and the love of farming shine through. The continued marriage of these disciplines will literally be our bread and butter for years to come.

Photo of Teri GaffordBy Teri Gafford, a Regional Economic Information Network director in the Atlanta Fed’s Birmingham Branch


April 14, 2014 in Agriculture, Commodity Prices, Outlook, Prices, Productivity, Southeast, Technology | Permalink

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