Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 26, 1992 TAG: 9201280370
SECTION: ECONOMY PAGE: 21 EDITION: METRO
SOURCE: By GREG EDWARDS STAFF WRITER
DATELINE: DRAPER LENGTH: Medium
FOR FARMERS, '91 WAS AN UNEVEN YEAR
"It wasn't a great year," said beef cattle producer Lewis Pratt. "But it certainly wasn't a disaster, either."Pratt was describing 1991 from the perspective of a farmer running 350 cows and 900 feeder cattle on 4,000 acres in Pulaski and Wythe counties.
This year, Pratt expects beef prices to remain flat or maybe turn a little leaner. But his operational costs will continue to grow, making the farmer's profit margins slim.
Beef prices run a cycle of roughly 10 years. "We've pretty much reached the top and we're getting ready to head down, I'm afraid," Pratt said.
Beef cattle generate more revenue than any other farm commodity in Virginia - $408 million in cash receipts in 1990. Beef, along with milk and tobacco, are the primary sources of revenue for farmers in the western portion of the state.
Across Virginia, the agricultural economy had its ups and downs in 1991, economist Wayne Purcell of Virginia Tech said.
In the livestock sector, cow-calf producers had a good year, Purcell said. Although prices were not as good in the fall as earlier in the year, they weren't bad. Most of Virginia's beef producers are cow-calf operators, those who raise calves and sell them when they're still young.
But for those farmers who bought calves in the spring to try to fatten them on grass over the summer, things did not go so well in 1991. Drought over much of the state - with the exception of far Southwest Virginia - combined with lower prices to hurt these farmers.
Pulaski's Pratt operates both cow-calf and stocker-cattle businesses.
Although cattle prices were depressed at year's end, Purcell saw that as a short-term problem. "I think we're going to see a fairly strong cattle market again," he said. Good news for Pratt.
For hog producers, the first three quarters of 1991 were good. But falling prices - from around 50 cents a pound to roughly 30 cents - hurt them in the fourth quarter, Purcell said.
Pork producers should be looking at a break-even year in 1992 as the downward pressure on prices continues.
Virginia has lost half of its pork producers in the past 10 years. But Purcell sees no reason why the state, which is famous for its hams, shouldn't rebound as the word gets out to farmers about the advantages of the contract production of hogs.
After an initial investment is paid off, it shouldn't be uncommon for hog producers to make $50 an hour for their efforts, Purcell said.
The state's dairy farmers had a mixed year in 1991 with the price of milk plummeting and then recovering. Dairy farming is the second biggest money producer for Virginia farmers, ahead of chickens and tobacco.
In the crop sector, Virginia orchards enjoyed their first good year in a long time. But the drought hurt corn and soybean production and on top of that prices were mediocre.
This year, soybean and corn production should be up in the state; but prices should be less than spectacular, Purcell said. On the other hand, this year could be an exceptional one for wheat producers. The nation's wheat supply is tight and could get tighter if new markets in the former Soviet Union develop.
And while 1991 was not a profitable year to produce wheat it was a good year for farmers who had the capability to store wheat. The price of wheat late in the year rested at roughly $1 a bushel higher than in the spring.
A commodity that made a come back in southeastern Virginia and on the Eastern Shore in 1991 was cotton. Roughly 17,000 acres were grown and for the first time in 50 years a cotton gin was operated in the state, near Emporia.
Yields were good, or 1.5 bales, each weighing 480 pounds, to the acre on average, and the quality was also good with fibers averaging 1.25 inches in length, said Eluned Jones, another Virginia Tech economist.
Nationwide, cash receipts from farming are expected to have dipped by $2 billion last year from 1990's $166.7 billion, according to the American Farm Bureau Federation.
For this year, the national outlook does not look any better, said Farm Bureau economist Terry Francl.
Francl said he expects cash expenses for farmers will rise by $2 billion across the country this year, which is similar to last year's increase.
While agriculture is in better shape with even milk prices edging up, other areas of the economy are suffering and that means tight credit for everyone, said Gene McClung, director of credit and financial services for the Southern States Cooperative.
Lenders remain cautious thanks in large part to pressure from regulators, he said. Lenders will continue requiring detailed financial information even from established farmers, he predicted.
Farmers actually get less than one-third of the money paid by consumers for groceries, according to the Virginia Cooperative Extension Service. In 1988, the most recent year studied, farmers received 30 percent of the cost of food compared with 37 percent in 1980.
The remainder of the price of groceries goes to processors, for packaging and processing and to retailers.