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Ag outlook: sales up but so is the cost of farming

Ross Norton //February 4, 2022//

Ag outlook: sales up but so is the cost of farming

Ross Norton //February 4, 2022//

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There was good news and bad news at the 6th annual South Carolina Ag Outlook Conference. The good news: sale prices for commodities are trending up; unfortunately, so are the costs associated with producing them.

Walt Morgan, crop insurance agent for Mishoe Insurance Agency in the Pee Dee area, said the conference is a way to help farmers mitigate risks.

“The prices being up will definitely help, so I’d say that’s the main positive,” Morgan said in a news release. The rising cost of things such as fuel and fertilizer was the primary negative.

Labor force participation is low, but strong job growth points to a solid rebound in the 2022 labor market, according to one conference speaker. (Photo/Molly Hulsey)“This is going to be a year that each farmer is going to be completely different,” he said, “so by having this information and being able to talk to them and make sure they are staying (on top of) their own budgets is going to be key for the upcoming year.”

The conference was held at Clemson University’s Sandhill Research and Education Center in Columbia, home base of the Clemson Extension Agribusiness Team.

“We need to make sure our farmers are equipped with the best information possible to make sure they stay on the farm,” Clemson Extension Director Tom Dobbins said in the release. “We can talk about sustainability all we want, but sustainability to me is profitability. If they’re not making a profit, they’re not going to be on the farm very long.”

Kansas State University professor Brian Briggeman, a conference speaker, pointed to the economic shutdown that accompanied the COVID-19 pandemic, which led to an historic drop of 31.2% in the country’s real gross domestic product.

Briggeman said recovery from that drop was initially strong but has now become “uneven,” according to the release. Labor force participation is low, but strong job growth points to a solid rebound in the 2022 labor market.

And while the country’s total public debt levels have soared, interest payments have remained manageable.

Still, according to Briggeman, numerous questions remain for 2022, including how long inflation might persist.

“We had trillions of dollars of fiscal stimulus come into the economy in 2020 and even 2021, and that supported strong consumer spending,” he said. “But what lasting impact is that going to have on the economy? We cannot continue to have the government propping that up. We need to have jobs in place and people working — that is far more sustainable.”

Among various commodities, Clemson Agribusiness Program Team Director Nathan Smith said South Carolina planted acreage for peanuts dropped to 69,000 acres in 2021 with an average yield forecast at 4,100 pounds/acre, matching a record set in 2007.

And while 2021 U.S. planted acreage decreased 5% to 1.58 million acres, the yield is projected at 4,105 pounds/acre, the second largest ever if realized, Smith said in the release.

Thus, the overall outlook shows the pace of demand increase continues, led by peanut butter. Carryover stocks are stable at roughly 1 million tons, shelled prices are likely to remain stable, and increased production in 2022 is likely because they can be grown without adding fertilizer, according to Smith. The announcement of a new peanut shelling plant to be built in South Carolina will also help encourage farmers to grow more acres of peanuts.

As for the cotton industry, 2021 South Carolina planted acreage was up 16% to 210,000 acres and cotton average yield is projected at 925 pounds/acre, up 15% from 2020.

“I think that global recovery as shown by the increase in GDP is going to continue to be slow, but we’re seeing it,” Smith said in the release. “That includes an increase in the agricultural section, and global consumption of cotton is increasing and rebounding from the pandemic.”