There’S Something About Dairy Prices For ‘99 Are At Record Levels, Which Can’T Be Said For Region’S Crops

Dairy is king this year in the Inland Northwest.

According to a 1999 agriculture overview prepared by economists in Washington, Idaho and Oregon, this is the one commodity that is doing well.

And this year, farmer Steve Courchaine of Newman Lake is glad to be milking cows.

Times are tough for most farmers producing anything else.

Wheat, apples, peas or potatoes: though of good quality and abundant, nearly everything else is fetching depressed prices.

But the one commodity - and one that has chronically suffered low prices over the past decade - is finally doing well.

Dairy producers in the Pacific Northwest are enjoying record high prices as they begin 1999, farm economists say.

Though dairy prices are expected to drop in the second half of the year, more people are eating butter and drinking milk, so dairy farmers in 1999 will still bring in revenues above the five-year average.

Roger Cady, an extension dairy specialist with Washington State University, said producers may respond by increasing production up to 2 percent nationally.

Milk is developing a better image, Cady said. It’s healthy again.

Unlike many other businesses, dairies benefitted last year by the Asian financial collapse, because less corn, alfalfa and other feed crops were purchased by foreign buyers.

That surely helped Courchaine, who milks about 140 head.

Cheaper feed and higher prices make dairying nicely profitable for the first time in years, he said.

He thinks another reason for improved prices is that a lot of dairy farmers have quit the business during the past decade because of ever-increasing environmental restrictions.

“The small dairy got bigger, and he had more of a pollution problem,” said Courchaine.

Washington, lately, has been cracking down on runoff from dairies and feedlot operations. Dairies in Washington this year also face new manure-management legislation, which likely will cause some farmers to have to reduce herd sizes.

Courchaine, with fewer than 200 cows, won’t be as affected by the law as the dairies in Yakima County that hold more than 6,000 head.

Yakima County has now surpassed Whatcom County as Washington’s leader in cows and milk production. Still, Washington dairy herds have been shrinking, while Idaho’s are growing.

Many dairies are moving their herds to Southern Idaho, where “cheap ground and excellent forage supply is accessible,” Courchaine said. “Idaho is very farmer-friendly.”

According to Cady’s report, last year Idaho surpassed Washington in both number of dairy cows and total production.

Nationally second only to California in variety of agricultural products and with some of the best agricultural land in the world, much of the Inland Northwest’s farm economy continues in a precarious time.

Apples

Washington’s top commodity continues troublesome for apple growers.

While orchardists produced 22 percent more apples in 1998 than they did the year before, estimates show international sales are down, due in large part to Asian economic problems.

WSU economist Tom Schotzko said apple sales in the U.S. have been stagnant for several years, so Washington growers assessed themselves an extra 15 cents per carton, or $10 million to $15 million total, to increase domestic sales.

Schotzko predicts some improvement in Asian sales this year, but also serious competition from China, which is expanding orchard acreage. He sees Mexico as a strong market.

Wheat

This year should bring both good news and bad news for wheat farmers.

After two years of very low prices, farmers can expect about 40 cents more a bushel. But, economists say, that’s not enough to prevent a third bad fiscal year for the region’s wheat industry.

University of Idaho economist Larry Makus said that the 1997-98 world wheat crop of 611 million metric tons is the largest ever. And next year’s, a predicted 585.8 million metric tons, will be the third largest in history.

That means more competition for local wheat in the world market.

He said farm-level wheat prices for 1998-99 are forecast in the range of $2.60 to $2.80.

Storage at grain elevators, which was a problem in the region last summer when many elevators were dumping grain on the ground because they were out of room, is not an issue this time of year. Most elevators were required to move or cover the grain in October.

And much of the grain has been shipped to storage tanks in Portland from where it is loaded onto ships and sent to foreign markets.

Beef

Though the dairy industry is up, the beef industry is down.

Cattle and calves, one of Washington’s top five crops, continued in its downward price trend in 1998.

Perhaps good news for cattle farmers is that last year’s low prices caused ranchers to plan for a smaller calf crop in 1999, thus decreasing the herd size. That could raise prices somewhat, according to Ray Folwell, professor at WSU.

Producers are now getting $60 to $63 per hundred pounds of live animal. That could move up to as high as $66, even $70 if severe winter weather reduces feed and supplies.

But beef production still may not be profitable for many cattlemen, Folwell said.

Prices are being held down by declining consumption in the United States and by economic problems in Asia, especially with Washington’s biggest customer, Japan.

Potatoes

This is not a great year for growing potatoes, even in Washington, where yields per acre are the highest in the world.

While this is one of the best spots in the world to grow spuds for frozen french fries, according to Desmond O’Rourke of the WSU Impact Center, 1998’s crop looks to be the second unprofitable crop in a row.

Despite the low prices in 1997, Northwest farmers, including those in Idaho, planted more last year and harvested 27,000 more acres.

What may help in the coming year is poor weather in Europe. Prolonged rain, followed by frost in Holland, destroyed much of that country’s crop.

“Although the United States does not normally export many potato products to Europe, that could change with this crop,” said Joseph Guenthner, an economist with the University of Idaho extension.

“The lack of European competition also allows U.S. processors to gain market share in other parts of the world,” Guenthner said.

Courchaine is glad he’s doing dairy instead of beef, potatoes or apples. He got into farming back in 1977 by forming a partnership with his parents and siblings.

“Dairy farming was pretty good at that time,” he said.

Then it soured.

Courchaine’s worst years started in the mid-1980s and lasted into 1998. Now things are going well, he said.

“How long will it last?,” he said. “I don’t know.”

This sidebar appeared with the story: THE AG LEDGER In Spokane County, an estimated 14,000 jobs are tied directly and indirectly to agricultural exports. That’s one out of 15 jobs. Of those 14,000 jobs, 75 percent are in sectors like retail, health care and business services. Agricultural exports drive an estimated $846 million worth of income in the Spokane 19-county trade area. The exports drive $358 million in Spokane County alone. Agriculture is Washington’s leading employer. In 1997, more than 149,000 were hired to produce, harvest and process.

Source: Washington State University survey funded by the Ag Bureau of the Spokane Area Chamber of Commerce.