Escalating costs cloud agriculture’s future
Jul 31, 2006 9:26 AM,
By Hembree Brandon
Farm Press Editorial Staff
Mississippi’s poultry industry — the state’s largest agricultural industry in value of production — is being hit with major increases in costs as a result of higher energy prices and the fallout from last year’s Hurricanes Katrina and Rita.
Row crop producers are scrambling, too, to try and find ways to counteract similar problems.
In a seminar on “The Evolving Global Energy Market: Challenges and Opportunities for Agriculture” at the annual conference of the Mississippi Agricultural Economics Association, two farmers discussed situations they face in trying to survive in their profession.
“The cost of everything is going up,” said Lyle Hubbard, Magee, Miss., who operates six broiler houses for Tyson.
Prices for butane and propane for winter heating to protect baby chicks have escalated along with gasoline and diesel, he noted. “I used $10,000 worth of butane for one flock this past winter.
“Electricity is more expensive for running cooling fans, pumps, and wells. Insurance following Katrina has gone up 33 percent or more. I know one producer whose insurance went from $6,200 per year to $38,000. Many are facing even higher prices, or even the possibility of being cancelled. Some companies are no longer writing insurance for our industry.
“The cost of building new poultry houses keeps going up — lumber, steel, everything’s higher. Two years ago, a new house cost $155,000 start to finish; now it’s $200,000 or more.”
While poultry companies are helping growers with additional fuel allowances, Hubbard says, “Right now it’s very tough to cash flow.
“Poultry’s a vertically integrated business, and everyone along the chain is facing the same challenges. Poultry prices are down now, and things are tough for the industry.”
Environmental issues are a constant challenge, he says, with increasing requirements for permits, recordkeeping, soil sampling, waste management, etc.
“We look at every way possible to hold the line on costs, including alternate energy. We hope methane digester systems will become more practical in terms of cost and efficiency.
“We’re also paying close attention to cleaning and maintenance of fans — cleaning them often, keeping belts tight, eliminating airflow obstructions — in order to maximize efficiency and cut down on electricity use.”
Poultry production has been a mainstay of Mississippi agriculture, Hubbard says, particularly in combination with cattle and forestry.
“But right now, the future is cloudy for our industry in terms of costs and returns.”
Bill Ryan Tabb, a rice/soybean producer at Cleveland, Miss., said the cost-price squeeze “has made us all better managers from start to finish — we’re looking at every detail of every operation on our farm with an eye to cutting costs, increasing efficiency, and getting maximum yields.
“It’s not just energy, but everything: which fields hold water better for rice, cutting rice earlier so we can take advantage of late summer/early fall heat and use less gas for drying.
“If we’re going to survive, we’ve got to look outside the box in our farming methods, and maybe even the crops we grow. We’ve got to adjust and cope, or look for another profession — and I’m not ready to change jobs.”
Tabb said farmers are concerned about the future of federal farm programs.
“I’m just hoping we can keep what we have in the current farm bill, but I doubt that will happen. It’s not a perfect bill, but I like the freedom-to-farm concept. The current administration has been pressing for cuts in farm programs, and I’m sure we’ll get some, but I hope they’ll be minimal, or we could see a major impact on the Delta’s economy.
“When agriculture hurts, the entire Delta hurts.”
U.S. agriculture “has a lot of solid leaders,” Tabb says, “but not a lot of them are young people. I see that as part of our job — to get more people involved in politics on behalf of agriculture.
“We’re losing support every day, and if we’re going to stay in farming, we’re going to have to fight for everything we get.”
Recalling the lines for gasoline and water that followed Hurricanes Katrina and Rita last year, Tabb said, “Just think what would kind of situation we’d be in if we dismantle the most efficient agriculture system in the world and have to rely on imports.”
e-mail: hbrandon@farmpress.com
