Many businesses move in cyclical patterns, with periods of highs and lows, of growth and stagnation. The agriculture industry is no exception.
After five straight years of revenue increases in Idaho farm cash receipts, Garth Taylor, University of Idaho professor of agricultural economics, said farm cash receipts for the state of Idaho in 2015 are down by about 9 percent compared to 2014.
Taylor presented UI”s annual “The Financial Condition of Idaho Agriculture” report to state legislators Jan. 8 with UI associate extension professor, Ben Eborn. Taylor said although there were some successful crops, the majority of commodities experienced a decrease in revenue.
“We had very few bright spots last year in 2015 for Idaho agriculture,” Taylor said. “Sugar beets were up and beef prices were up, but the rest of the commodities were by and large down.”
Of all the commodities, Taylor said the greatest decline came from milk products, which make up about 30 percent of all cash receipts.
Taylor
“When milk makes up well over a third of the cash receipts from agriculture in the state, then that really hits the revenues,” Taylor said.
Eborn said the primary reasons for a decline in milk sales are an overproduction of the product paired with a decrease in the rate of international exports.
“We had a record high production across the state and across the country,” Eborn said. “And milk exports to other countries have been slowing down.”
Not only were milk sales and exports low, but Eborn said crops like wheat, down by 17 percent, and hay, down by 12 percent, also saw a decline in sales for the same reason.
Eborn said the decline in international exports is primarily due to the strengthening of the U.S. dollar, which makes dairy products more expensive to the rest of the world.
Although the 9 percent decrease in total farm cash receipts may come as a surprise after years of success, Eborn said the decline in state agricultural revenue is a largely cyclical phenomenon.
“The last five or six years have been really good for Idaho agriculture,” Eborn said. “There”s always a cycle in agriculture – we”ve had our turn of the upper cycle, now it”s our turn at the lower end of the cycle.”
While Taylor and Eborn don”t view these coming “off years” for Idaho agriculture as permanent, Eborn said farmers will still need to take extra precautions to ensure they stay in the black.
“It”s like any business, so when times get tough you have to tighten down your management skills,” Eborn said. “Monitor cost production, be frugal in expenses and work as hard as you can.”
Despite the projected decrease in agricultural revenue for the state, Taylor said students pursuing careers in agriculture don”t have to worry about finding jobs.
“Ag students are getting great jobs now, especially those in agronomy,” Taylor said. “They”re getting fabulous paying jobs.”
Taylor said for agronomy students, or individuals who study the production of crops, the decrease in revenue might even be beneficial, as the tight situation could encourage large farmers to hire more crop consultants.
“Farmers cannot afford to makes these little teeny mistakes that cost millions of dollars,” Taylor said. “They need to have a person that is really well-educated in crop consulting or things like that.”
Although Eborn projects that Idaho will continue to see a decline in agricultural revenue over the next couple of years, Taylor said at the end of the day, the agricultural industry will remain stable.
“We”ve been on a record run in agriculture, we”ve had years of breaking records in the state of Idaho and nationally,” Taylor said. “Making food to feed the world is big business and this is not going to go away because of low milk prices.”
Corrin Bond can be reached at [email protected] or on Twitter @CorrBond