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2019 outlook for Idaho ag is mixed

By: Sean Ellis
Published in Blog on  December 31, 2018

By Sean Ellis

Idaho Farm Bureau Federation

POCATELLO – Idaho’s agricultural sector continues to be a vital part of the state’s economy but depressed commodity prices, coupled with rising input costs, are causing many farmers and ranchers to face some tough challenges at the moment.

That was the general message during University of Idaho’s annual “Idaho Ag Outlook Seminars,” which took place Dec. 11-13 in Idaho Falls, Burley and Caldwell.

About 230 producers and ag industry members attended the seminars, which included a dozen presenters who discussed the health of the state’s agricultural sector and provided a look at what farmers and ranchers could expect in the coming year.

While agriculture continues to be the stalwart of Idaho’s economy, particularly in rural areas, many Gem State producers, like their colleagues around the nation, are facing some challenging times as farm commodity prices remain depressed and many input costs continue to inch up, said UI Agricultural Economist Garth Taylor.

“This is a tough time for agriculture,” he said during the Idaho Falls seminar.

Taylor and fellow UI Agricultural Economist Ben Eborn are forecasting that total farm cash receipts in Idaho during 2018 were basically the same as 2017 but net farm income decreased substantially.

The good news for Idaho, Taylor said, is that agriculture, which accounts for 14 percent of jobs in the state directly and indirectly, as well as 16 percent of the state’s total Gross Domestic Product, will continue to have a stabilizing effect on the state’s economy even though many farmers are struggling.

That, he said, is because farmers spend roughly the same amount of money on seed, fertilizer, cattle feed, labor, etc., regardless of how much they receive for their commodity.

“It doesn’t matter whether milk is $14 (per hundredweight) or $24, that cow still has to be fed and milked,” Taylor said.

He said that despite the challenging times in farm country, producers in Idaho and around the U.S. have pretty clean balance sheets overall.

But “that does not mean there aren’t some points of stress, particularly in the dairy industry,” he said.

The outlook for Idaho’s 457 dairy operations isn’t rosy, said Idaho Dairymen’s Association Executive Director Rick Naerebout.

“Even the bullish guys seem a little bit bearish” on dairy prices, he said.

Dairy is Idaho agriculture’s No. 1 farm commodity in terms of farm-gate receipts.

As milk prices continue to be below the break-even point for many dairymen, Idaho lost 15 dairy operations in 2018, Naerebout said.

But forecasts show that milk prices could inch above the break-even point toward the latter part of 2019, he said.

“Hopefully, we’ll see some light at the end of the tunnel on dairy prices during the latter part of the year,” Eborn said.

The outlook for wheat, Idaho’s No. 4 farm commodity, is for slightly better prices in 2019, said Jon Hogge, a UI grain extension specialist in Rexburg.

Prices for wheat, corn and barley, Idaho’s No. 7 farm commodity, should be a little higher during 2019, he said, and there will opportunities for producers to make some money on these commodities if they are on top of their game and wise about how they market their crop.

A widespread potato crop failure in the European Union during 2018 could potentially have a positive impact on potato prices, said Bruce Huffaker, president of North American Potato Market News.

“The European Union has had a widespread potato crop failure. The losses are substantial,” he said.

As a result of those losses, French fry production from European nations could be down 10-15 percent this year, Huffaker said, and that will cause a lot of market turmoil globally. He said that should have a positive impact on prices for Idaho farmers who grow potatoes, the state’s No. 3 farm commodity and No. 1 crop.

“We should be getting higher prices for potatoes,” Eborn said, summing up Huffaker’s presentation.

Alfalfa hay, the state’s No. 5 crop, could be one of the bright spots for Idaho’s agricultural industry again in 2018, according to Reed Findlay, a UI extension educator out of Blackfoot.

“In the Pacific Northwest this year, alfalfa was one of the crops that was a little bit profitable,” he said, adding that projections are for hay prices in 2019 to remain relatively stable or possibly tick up a bit higher.

Costs for many inputs, including fuel, chemical, fertilizer and labor, are expected to increase in 2019, which will increase the cost of production, said Ashlee Westerhold, a UI extension economist in Twin Falls.

A wild card hanging over the outlook for U.S. agriculture in 2019 is China, said Doug Robison, the Idaho president for Northwest Farm Credit Services.

If the United States and China succeed in reaching a trade deal, “it will be a bit of a boon for agriculture here in the U.S.,” he said.

But China’s growth has started to level off, which could be a major headwind in commodities markets, Robison said.

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