Profits could plunge for U.S. farmers

Rising energy costs plus higher interest rates equals plunging profits for the nation's farmers in 2006, according to a U.S. Agriculture Department report released this month.

While Utah's agriculture producers undeniably will share in the struggle, local authorities say it likely won't be as severe as is predicted for the sector as a whole.

"As a producer, I'm not looking at things being much different than they have been the last number of years," said Leland Hogan, a cattle and alfalfa farmer in Stockton, Tooele County.

On average, net income for a farmer should be $48,600 this year, down from $68,300 last year, according to USDA forecasts. From 2000 through 2005, the average was $52,500. Analysts noted they made their projections assuming that weather will be normal and crop yields will be average, which could change.

Equivalent state-by-state data was not immediately available. A 2002 census report indicated that the average net cash farm income of operations, per Utah farm, was $14,404. But the USDA's National Agriculture Statistics Service's Utah office notes that that number includes anyone with farm-related cash sales over $1,000, or even the potential for cash sales over $1,000.

The past two years saw record-breaking crops as well as high prices for cattle and hogs.

Nationwide, net farm income was $72.6 billion last year and $82.5 billion in 2004. In Utah, Utah Department of Agriculture and Food spokesman Larry Lewis said farm income for last year was $1.25 billion, led by livestock.

"Utah's ag economy is projected to be strong this year," Lewis said. "Some of the individual commodities will be lower than last year. For example, last year we had record high numbers for beef. The numbers are still good for beef sales at this point as far as price per pound goes, but not as high as they have been in the past. But no, we're not projecting dramatic declines in revenue in Utah for the year."

Live beef prices as of January 2006 were about a nickel higher than they were about this time last year (about 94 cents per pound, Lewis said, compared to about 89 cents per pound in January 2005). However, Lewis said it appears beef prices are "trending downward."

"It's higher by about 5 cents now, but the price is slipping, whereas last year at this time it was rising," Lewis said.

Milk prices, too, are showing signs of weakness, according to Utah agriculture Commissioner Leonard Blackham.