Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 8, 1995 TAG: 9501060057
SECTION: BUSINESS PAGE: F-4 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
"You just have to plan for the worst and hope for the best," said Blacksburg farmer Bill McDonald.
Even assuming that the weather cooperates, Southwest Virginia's beef cattle producers probably have another year of low cattle prices to look forward to, with maybe some slight improvement from 1994's lows, according to observers of the farm economy.
Tobacco growers, on the other hand, will face 1995 in much better shape than they could have hoped for a few months back. Rather than facing cuts in the amount of the flue-cured tobacco they are allowed to sell, producers will see their quotas grow by 16 percent thanks to a seven-year buyout of surplus tobacco stocks by the major tobacco companies.
Last year saw record soybean, wheat and cotton production in the Southeast and record corn, soybean and cotton crops nationally. Although corn and soybean prices have been depressed, wheat and cotton prices have remained favorable to growers, said Joe Coffey, an economist for the Southern States Cooperative in Richmond.
Wheat, cotton and tobacco acreage should increase this year, Coffey said. Although cotton is not grown in Southwest Virginia, tobacco and wheat are.
Coffey said he expects record levels of livestock production to continue into 1995, but he thinks livestock prices have already hit "rock bottom," and some improvement in prices could be expected this year.
In the dairy farming sector, another important farm commodity in Southwest Virginia (though less so than in the past), Coffey said he expects milk prices to be about the same or weaker than in 1994. However, lower feed costs should keep earnings about the same as last year, he said.
Increased demand for food because of a robust economy at home and abroad should help offset lower farm prices, Coffey said. Farmers' operating costs should increase, but modestly, he said. Higher steel prices might mean higher prices for farm equipment.
McDonald, who raises cattle and sheep, doesn't agree that cattle prices will rise this year. In fact, they may go a little lower, he expects. "There's just a whole lot of animal protein out there," he said.
On the plus side, though, McDonald's feed prices are down as a result of good corn and soybean crops.
"By the very nature of farming, you have to be optimistic," said Botetourt County cattle producer Michael Beahm. However, he, like McDonald, is concerned that the cattle market hasn't hit bottom yet.
Noting that some meatpackers were expecting record profits for 1994, Beahm concluded that the low prices that packers are paying farmers for cattle are not being passed on to the beef consumer.
Mark Givens, a Giles County farmer, said that low cattle prices can benefit as well as hurt farmers. Farmers who buy calves to raise might benefit from the low prices, he said.
Givens said he believes higher interest rates might hurt the cattle market by increasing the costs of those who borrow to buy their herd.
In the policy arena, farmers face another congressional rewriting of the national farm laws this year. Despite the political leadership change in Congress, Coffey said he doesn't expect any drastic change in farm programs. Congress will make an effort to ensure farmers can take advantage of export markets that have been expanded by the North American Free Trade Agreement and the General Agreement on Tariffs and Trade, he said.
McDonald would like to see simplification of government regulation of farming. "It would be easier to do things on a voluntary basis than go through a whole lot of rules and regulations that are confusing and ambiguous," he said.
Of increasing concern to farmers are environmental regulations and tax policy, Beahm said. The capital gains tax on farmland needs to take into account how long the land is held before it's sold, he said.
Farmers also worry about losing the right to use their land as they see fit without unreasonable interference from the outside, Beahm said. "It's harder and harder to farm and produce without concern of who's looking over your shoulder," he said.
by CNB