The agriculture sector in Utah continues to improve, generating more than $1 billion in wages per year, including retail and profit income and return on capital, a Utah State University economist said.
"When income other than wages is included, this sector adds $2 billion to Utah's economy, said Don Snyder, USU Extension marketing specialist and professor in the Economics Department.He said this includes both the agricultural industry in the state and those industries that provide input to farming, processing and distribution of agricultural commodities.
He was one of several economic authorities who spoke recently in Salt Lake City during an Agricultural Outlook conference sponsored by USU Cooperative Extension Service, USU Department of Economics and the Utah Bankers Association.
The purpose of the conference was to share up-to-date price and market information and industry trends projected for 1991.
While the agricultural outlook is generally healthy, Snyder said, there are three areas of concern for Utah farmers, fruit growers and ranchers. These include the lingering drought, a reduction in grazing sources and world oil price fluctuations.
World production of grain and livestock products increased from 1989 to 1990. This has placed downward pressure on prices for some commodities, especially for wheat, said DeeVon Bailey, USU Extension marketing specialist.
Many economists predict the U.S. economy will begin to grow again after the first half of 1991, he said.
"This means demand for agricultural commodities, as a whole, should be slightly above 1990 levels in 1991," Bailey said.
Darwin B. Nielsen, USU Extension economist in ranch management, said the 1991 general economic outlook is more difficult to predict.
Despite these uncertainties, he said the outlook for cow and calf producers in Utah remains relatively bright. Feeder cattle prices are anticipated to be at high levels in 1991, while feed costs should remain at about the same level as in 1990.
As a result, cow and calf operators should experience their sixth straight year of positive returns over cash costs.
Nielsen said a great deal of this will depend on moisture this winter and summer. He said continued drought will seriously deter Utah cow and calf operators from taking advantage of expected good economic conditions in the cattle industry.
In contrast, prospects for a good year in the sheep industry are dubious, said E. Bruce Godfrey, USU Extension economic specialist in farm management.
Lamb prices dropped about $10 per hundred and the market price for wool dropped from $1.47 per pound to $0.71 between October 1989 and 1990, according to the United States Department of Agriculture.
"These prices are the lowest received by sheep producers in about 10 years," he said.
He said this poor showing may force many producers in Utah to seriously consider liquidating their herds during the next few months.
Prospects for other agricultural commodities, however, are not so ominous, according to 1991 projections offered during the Agricultural Outlook conference.
The following is a brief rundown.
- Hay: In general, the outlook for alfalfa hay is positive.
It is the largest crop industry in Utah, requiring more than 450,000 acres of land and producing more than two million tons of forage. Economic conditions insure that hay production will remain one of the most significant crop industries in the state.
- Wheat: The past crop year has been a disappointing one for wheat growers. Production is up and exports are down, resulting in a doubling of ending stocks. Consequently, prices are expected to remain significantly lower for some months yet than in the past couple of years.
- Feed grain: Over the next year, feed grain prices should be at about the current level, or a little higher, if midwestern farmers do not change the number of acres significantly and normal precipitation occurs.
Farmers and ranchers in Utah should carefully watch planting intention reports during the first part of 1991 to see what may occur in the "bread basket" of the nation. Feed grain prices could be quite volatile and increase dramatically if plantings decline - especially corn - or if the amount of rainfall in the Midwest is limited.
- Milk: Excess milk production may bode well for the consumer, but it poses a serious problem for the dairy industry.
The forecast is somewhat uncertain, but most indicators and most analysts look for increased production exerting downward pressure on prices and increases in government stocks.
For a year or so, at least, producers should expect prices down around the support level.
- Meat and poultry: Record supplies of red meat and poultry will be available for consumers in 1991. The surge in meat supplies throughout the year will be led by poultry production, which the United States Department of Agriculture expects to increase by 6 percent from the 1990 level.
- Turkey: Turkey production and consumption increased during 1990 and is expected to increase another five percent to seven percent in 1991. Turkey production should be profitable during 1991, but profits will not be large. Prices should be just slightly above the break-even level for the most efficient producers.
- Fruit: Prices for apples, tart cherries and peaches were stronger in 1990 than in the previous three years because of lighter crops. Spring frosts, poor pollination weather, high winds and an unusually hot, dry summer reduced both apple and tart cherry production an estimated 60 percent. Significant losses in peaches, tart cherries and apples were experienced.
Apple growers in the southern part of Utah County - the state's largest apple-producing area - suffered a nearly total loss.