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Agriculture industry riskier than ever

More acreage going to corn

POSTED: February 10, 2008 5:05 a.m.

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Officials with the University of Georgia College of Agricultural and Environmental Sciences said Tuesday that some segments of agriculture in the state will face challenges in the year ahead while higher market prices for some commodities will be offset by higher production costs.

"This is probably the most uncertain time in agriculture I’ve ever seen," said Scott Angle, dean of the UGA ag school. "The changes that are going on right now are unprecedented."

Angle said in times past, he could predict where the industry was going.

"Today, I really can’t predict where we will be as an industry five years from now," he said. "The risk in our industry is higher than ever."

The dean’s comments came on the second day of a five-day tour of the state to offer insight into the changing market climate and to look at other factors, such as the current drought.

John McKissick, director of the center for agribusiness and economic development at UGA, said the current demand for corn is resulting in changes in the planting of other crops, such as soybeans, cotton and peanuts.

"In just two years, the amount of corn we use for ethanol production has gone from 1.5 billion bushels to over 3 billion bushels per year," McKissick said. "That’s about 25 percent of all the corn we produced this past year in a record production year. One out of every four acres of corn in the U.S. is going into ethanol production. That’s more corn than we export."

But McKissick said that the increased acreage of corn has pushed down the acreage of other crops.

"All of these crops are in competition for a limited amount of acreage we have in the U.S.," he said, adding that most of the acreage that was used for new corn production was land previously used for soybeans.

He said soybeans, which were selling at $190 a ton a year ago, are now bringing more than $300 per ton.

"Bidding for acreage is going on in the U.S.," he said.

There is good news for farmers in terms of prices, but bad news on the costs of growing crops and livestock, McKissick said. "Almost across the board, all of our crop producers are looking at a very good year in terms of prices," he said. "For livestock, things look OK, as far as prices are concerned. But there is a real question as to whether or not the prices we receive will stay ahead of our cost of production."

He said it looks good for the crop side, but there are more questions for livestock, fruits and vegetables and ornamental horticulture.



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