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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.



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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The Cream of the Crop

The Atlanta Fed’s Agriculture Advisory Council convened recently for another lively discussion and, as always, we learned a great deal. While last year’s overarching agriculture story was “all about the drought,” this year’s conversations were more about “cool and wet.” Council members told stories of delayed planting or replanting, but participants acknowledged that some of that wet and cool weather contributed to good yields, although there is some frost risk for late planted/harvested crops.

Generally speaking, exports for many southeastern agriculture products are expected to increase. This includes beef, poultry, wood/biomass, grains, cotton, and rice. Members also hope for continued strong demand from China for yellow pine saw timber. We continued to hear reports of significant downside risks for cotton. Should China release its large cotton inventory onto the market, cotton prices and exports would be adversely affected.

Regarding investments, council members reported replacing equipment in the timber industry, as well as farming implements such as irrigation equipment as well as storage augmentation. As one council member said, “We are improving what we have rather than expanding.” Additionally, some farmers are replacing smaller, labor intensive equipment with larger, more modern equipment. While these acquisitions improve production efficiency, they also address difficulties in finding labor. Reports persist of paperwork burdens with the E-verify program and the high cost of housing people participating in the H2A guest-worker program.

Overall, farm product prices are down, and headline consumer price index (CPI) is trending down. The chart below shows CPI trends and the price index for all farm products over time.

Headline CPI and Prices Received by Farmers/All Farm Products

Although overall farm product prices are down, some specific commodity prices are helping regional agriculture producers, especially those in the cotton, rice, beef, hog, and poultry sectors, which are all showing higher year-over-year prices. Soybeans and corn prices are trending down, although lower corn prices are good news for protein producers whose use corn for feed. Florida citrus growers continue to have problems with citrus greening, and although they believe a solution is forthcoming, the problem is not yet resolved. Meanwhile, the cost of production is higher than normal, but lower yields have resulted in higher prices for citrus products. Lumber prices, which are down from the first half of 2013, are still well above recession-era lows (see the chart).

Random Lengths Framing Lumber Composite ($/1000 Bd Ft)

Land rents are being actively negotiated. Landlords, seeing recent good yields, are negotiating future rents based on these higher yields. Timberland prices were reported as being flat or down, but several council members reported higher farmland prices. Increased costs tied to regulatory compliance and the impact of the Affordable Care Act were both mentioned as having ongoing negative impact on general business conditions.

Council members also discussed how agriculture has changed over time, moving away from small and midsized farms that depended on the subsidy system toward farm consolidation. As one participant said, “Two generations ago, you managed your farm with a little spiral notebook and a pencil in your front pocket. The next generation used a legal pad. Now computers and business plans are the norm.” Members noted that young people are getting degrees and are eager to join the ranks of modern farmers. Some have interests in local organic farming, but others see big agriculture changing and want to be a part of the transition.

Another topic of discussion was the growth of agritourism, which includes such realms as local sourcing, sustainable sourcing, and even destination weddings. An EconSouth article titled "Agritourism Takes Root in the Southeast" reported on this growing trend back in 2011, and it’s one that is helping farmers and rural economies tap into the region’s dynamic tourism market.

So as farmers complete fall planting, finish their harvests, and prepare for winter, we here at the Fed continue to watch, listen, and learn. While farm price and production reports remain essential in our analysis of the agriculture sector, our Agriculture Advisory Council meetings give us the breadth and depth of the story that is agriculture in the South.

As for me, I am thankful to understand a little more about how what ends up on my plate gets there. When I visit the season’s pumpkin patches and tree farms, I know I am in for a lot of fun, but I will also be looking behind the curtain to learn more about the fascinating business that is agriculture.

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

November 7, 2013 in Agriculture, Business Cycles, Prices, Productivity, Tourism | Permalink


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Food for Thought

I admit it. No matter how much I try, I do not have a green thumb, and woe to any houseplant (or outdoor plant, for that matter) that makes its way into my care.

With that said, you might be surprised to learn that I serve as the Atlanta Fed’s lead agriculture analyst. My duties include meeting with some pretty savvy folks in the field of agriculture. The Birmingham Branch of the Federal Reserve Bank of Atlanta hosts the Sixth District’s Agriculture Advisory Council and we recently convened the first of our two meetings of 2013. Here are some of the meeting’s highlights:

  • High commodity prices have resulted in many producers having record revenues although increasing input costs continue to challenge margins.
  • Agriculture producers are turning more and more to technology and other capital investments to improve production and reduce the need for manual labor. As an example, the cost to plant Miscanthus giganteus (a large, perennial grass hybrid used for biofuel production) can fall from $1,400 to $400 per acre by using a newly developed mechanical planter. Other contacts report that more advanced equipment entering the market is twice as productive as older versions, thus reducing both labor and fuel costs.
  • The two most prevalent labor topics discussed were the continued importance of the guest worker program and the uncertainty associated with the costs and effects of the Affordable Care Act. Council members were heartened that the current immigration bill being debated recognizes the agriculture sector’s need for migrant labor.
  • One of the biggest surprises in the conversation is that there is a real increase in the number of young people entering the field of agriculture. “They are coming back to the farm” with college degrees and enthusiasm, one Council member said, adding that these young people are “well educated, globally market savvy, and ready to take calculated risks.”
  • When the discussion turned to productivity, it was enthusiastically agreed that there are still significant productivity gains to be had in agriculture. “What robotics did for manufacturing will be replicated in agriculture,” was a comment supported by all members.
  • Farmland values continue to rise, supported by both low interest rates and high commodity prices. Council members noted that nonfarming investors are purchasing farmland and farmers are buying adjacent properties to expand. Because of continued uncertainties (commodity prices, low interest rates, and government agricultural policy) typical land leases, which used to be three to five years in duration, are now being let for one-year contracts.
  • Overseas markets are driving up global demand for protein products, which in turn increase prices for U.S. consumers. Reduced supply may also be affecting beef prices as many cattle producers reduced their herd size because of the combination of last year’s drought and high feed prices. (Because it was so expensive to feed them, more head went to market.)
  • The effect of citrus greening, a deadly disease that has done great harm to the Florida citrus industry, continues to concern Florida orange and grapefruit growers. A lot of ongoing research is dedicated to finding a genetic solution for this problem.
  • Lumber prices are approaching 2004–05 levels as a result of growing demand (improving housing market and the demand for new homes) and tight supplies.
  • Cotton producers are watching China’s large cotton inventory; releasing that supply into the market could have adverse effects on cotton prices.
  • Issues surrounding both the use of genetically modified organisms globally and labeling requirements continue to be discussed, and resolutions to both issues will be economically important.

We will continue to reach out to our contacts in the agriculture sector, especially our Advisory Council, for their continued insight. And I’ll continue to watch, like all of you, how agriculture prices move. There’s a lot to that story.

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

May 8, 2013 in Agriculture, Labor Markets, Prices, Productivity | Permalink


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The Region's Farm Sector Plows Ahead

On September 27, Real Time Economics writer Neil Shah commented on the downward revision to second quarter U.S. gross domestic product (GDP) from 1.7 percent to 1.3 percent:

One factor in the 0.4 percentage point revision: Government statisticians factored in a drop in June in farmers' inventories, revising these down by some $8 billion. Basically, 2012's hot, dry weather has decimated corn and soybean crops, along with hay, making feed for cattle, hogs and chickens prohibitively expensive and pushing farmers to take livestock to slaughter early to avoid feed costs—a trend that diminishes their animal inventories and technically detracts from the nation's GDP growth rate.

In his blog post, Shah also noted that:

The drop in farm inventories in the second quarter accounted for about 0.2 percentage point of the 0.7 percentage point drop in GDP between the second and first quarters.

While we don't have quarterly agricultural-related GDP measures at the regional level, we do have some interesting insight into the Southeast's farm sector thanks to our Agriculture Advisory Council. The council met September 26 at the Atlanta Fed's Birmingham Branch and was led by our Regional Executive from that office, Lesley McClure. Here are some of the highlights from this meeting:

  • The drought that is gripping some parts of the country is having mixed impact on the region. The latest U.S. Drought Monitor shows that only central Georgia is experiencing drought at critical levels. Additionally, no part of Florida is showing any drought conditions for the first time in several years.
  • Agriculture contacts said that the rise in some crop prices resulting from the drought in the Midwest had led to increased crop production in the Southeast, where soil conditions were more favorable, but the overall rise in feed prices was putting pressure on livestock producers.
  • The drought-induced low water level in the Mississippi River is causing some shipping delays as barges have to slow down to navigate certain channels.
  • The Florida citrus crop is looking quite solid, and export demand is holding up well. Overseas demand for livestock is also strong.
  • High fuel costs increase farmers' production and irrigation costs. In addition, fertilizer prices are high, and transporting goods to market is also quite costly.
  • Biofuels research is continuing to accelerate. Shipments of wood pellets to Europe, which is looking for resources to replace coal, are increasing.

Although we did not discuss agritourism at the council meeting, I thought it was worth noting as fall is a popular season for agriculture-related businesses. An article by staff writer Lela Somoza in the Atlanta Fed's EconSouth magazine looks at this growing industry—read it and then head out to a local corn maze!

Photo of Michael ChrisztBy Mike Chriszt, a vice president in the Atlanta Fed's research department and

Teri GaffordTeri Gafford, REIN director at the Atlanta Fed's Birmingham Branch

September 28, 2012 in Agriculture | Permalink


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Atlanta Fed's Beige Book points to modest growth, rising caution

The Summary of Commentary on Current Economic Conditions by Federal Reserve District—commonly known as the Beige Book—is a report is published by the Federal Reserve eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.

Below is a summary of the Atlanta Fed's July 18 Beige Book:


  • Reports from Sixth District business contacts indicated that economic activity expanded at a modest pace in June and early July. The outlook among most firms remained cautiously optimistic, although the majority of contacts acknowledged that risks were weighted to the downside.

Consumer spending and tourism

  • District retail sales activity improved slightly in June and early July, but merchants reported that consumers remained very conservative.
  • Tourism activity and business travel remained strong, and the outlook among contacts was positive for the rest of the year.

Real estate and construction

  • District residential brokers indicated that home sales were flat to slightly higher compared with year-ago levels. Brokers also reported that the decline in inventories has helped stabilize home prices in many areas. The sales outlook among brokers remained positive with most anticipating continued modest year-over-year home sales gains.
  • District homebuilders reported that new home sales and construction rose modestly compared with year-ago levels. Contacts noted that multifamily construction remained robust. The majority indicated that new home inventories declined further on a monthly and an annual basis. In the near term, homebuilders expect sales and construction to post modest gains compared with a year earlier.

Manufacturing and transportation

  • Manufacturing contacts indicated that the pace of new orders and production growth remained positive but had moderated.
  • According to railroad contacts, intermodal activity continued to strengthen. Double-digit increases in shipments of petroleum products, motor vehicles, and equipment were reported; however, movement of grain, metallic ores, and nonmetallic minerals declined.

Banking and finance

  • Banking contacts noted some improvement in residential mortgage lending and auto loans continued to be a source of strength. Commercial and industrial lending remained soft.


  • Regional employment growth remained positive but muted. Employers continued to cite uncertainty regarding future economic conditions as a reason for limiting hiring, and recent economic volatility appears to have exacerbated these anxieties.
  • Contacts continued to note difficulty in finding qualified applicants for many highly technical positions. The skills mismatch problem has been especially hard on low-wage individuals, according to community and economic development contacts.

Prices and wages

  • Firms responding in June to the Atlanta Fed's Business Inflation Expectations survey reported a decline in unit cost expectations for the second consecutive month. Survey respondents indicated that, on average, they expect labor and material costs to rise 1.7 percent over the next 12 months. That figure is down from 1.8 percent in May and 2.1 percent in April.
  • Business contacts reported that lower prices for natural gas and refined oil products were reportedly providing some cost relief. Wage pressures remained modest, although some employers noted that they were increasing starting pay for workers with high-demand skill sets.

Natural resources and agriculture

  • Contacts continued to report that investment in expanding and maintaining existing transportation infrastructure would be necessary to accommodate increases in domestic oil and natural gas production.
  • Varying levels of drought conditions had expanded through much of the District, resulting in stress to some crops. However, the June tropical storm helped some areas.

The next Beige Book will be published August 29.

Photo of Shalini PatelBy Shalini Patel, a senior economic research analyst in the Atlanta Fed's research department

July 18, 2012 in Agriculture, Beige Book, Business Cycles, Employment, Manufacturing, Real Estate, Tourism | Permalink


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Regional poultry industry and exports

The poultry industry is the region's most important farm-producing sector. This $10 billion cash-producing sector is also the region's top farm exporter, one of the few national industries producing a trade surplus (see EconSouth Q4 2009).

According to the National Chicken Council, U.S. exports of poultry products in 2009 accounted for 18.8 percent of production. The economic impact on the poultry industry on District states is significant, according to an American Meat Institute (AMI) study. The AMI report estimated that in 2009 incomes paid by poultry companies in the region reached $8.2 billion, with the industry supporting nearly 49,000 jobs, mainly in Georgia, Alabama, and Mississippi.

Although the poultry industry this year has been boosted by improving domestic demand and lower feed costs, risks to the outlook exist, namely trade relationships with Russia and China—the nation's top poultry export markets. Chart 1 shows that in recent years, U.S. poultry export values were led by strong demand from Russia and China, countries that from 2006 to 2008 nearly doubled their purchases to $4.2 billion. In 2009 and early 2010, however, exports to China and Russia plunged dramatically as those countries boosted domestic production and placed limits on U.S. poultry imports.


Russia had been the top overseas buyer of U.S. chicken, accounting in 2009 for about 20 percent of U.S. broiler exports. In 2009, U.S. poultry shipments to mainland China accounted for about 18 percent of overall U.S. broiler exports. About half of the chicken parts sold to China are wings and feet, which are worth only a few cents a pound in the United States. In contrast, these products in China fetch more than 60 cents a pound, a price that no other foreign market comes close to matching.

Recently, the U.S. Bureau of the Census reported that through February 2010 total U.S. broiler exports in early 2010 were down 14 percent from the first two months of 2009. A large portion of the decrease was the result of falling shipments to Russia and China.

The decline in overall poultry exports in 2010 was not offset by larger U.S. poultry shipments to Hong Kong (a 335 percent year-over-year increase) and Canada (a 21 percent year-over-year increase).

Although poultry exports are a small piece of U.S. international trade, the industry supported by this trade and the resulting wages and revenue are important to the region.

By Gustavo Uceda, a senior economic analyst in the Atlanta Fed's research department

April 29, 2010 in Agriculture, Exports, Poultry | Permalink


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