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Montana ag producers not optimistic about upcoming year

 

March 19, 2020



People attending a virtual seminar on the economic outlook for Montana Tuesday heard agriculture producers have a gloomy outlook for 2020, even without figuring in impacts of the outbreak of COVID-19.

The Bureau of Business and Economic Research 2020 Montana Economic Outlook seminar set for Havre Tuesday was moved to an online presentation to reduce exposure to novel coronavirus 2019.

During the discussion, which also covered potential impacts throughout the economy of the COVID-19 outbreak, Montana State University Extension Economic Associate Specialist Joel Schumacher presented an agricultural “year in review,” detailing the agriculture trends of the past.

In a survey conducted over the summer, Montana farmers were asked how they thought their farms are doing compared with the previous year.

Schumacher said only 4 percent of farmers said they were better off than the previous year, down from 12 percent the previous year. Of Montana farmers surveyed, 54 percent believed they were worse off than last year, 12 points above the national number.

The survey also asked farmers how they thought things would go in the upcoming year. 52 percent of respondents said they believed they would be worse off, compared to last year’s 36 percent. This is almost double the national number of 29 percent.

“This includes really nothing about possible coronavirus impacts,” Schumacher said. “… they are not very optimistic here in Montana about the ag outlook.”

He said another indicator economists look at to gauge the health of the industry, particularly cattle production, is cash receipts.

“As you can see the bar goes up and down, but we had some great years around 2013 through 2016,” he said, “Then we’ve had considerably lower years for the last three or four. On the ag sector, again it varies quite a bit, but we had some great years in the early 2010s through about 2015 then we’ve seen declines in our crop revenues over the last few years.”

Schumacher said these declines are balanced out somewhat by an uptick in government payments, so the total declines are relatively slight.

He said Montana has been lucky to avoid any serious droughts in its major production areas this year, but he said that can change quickly and people in the ag sector should remain vigilant.

Schumacher said cattle and wheat prices have seen an increase in the past few months, but have remained fairly constant for the last five years.

“Events of the last three week may have some changes on what this market looks like when it comes time to deliver those calves or deliver that crop, or for those that are marketing barley or wheat that they have locked in a bin and haven’t fixed a price on,” he said.

Schumacher said that beef exports by value have been relatively steady among the product’s four biggest buyers with some decline in Japan and Canada, but an uptick in South Korea, and no changes in Mexico last year.

He said exports by value to China have increased but make up a very small percentage of total beef exports.

“Even if we saw, let’s say, a 100 percent reduction in our Chinese trade, that’s probably less important than the year to year volatility we’ve had from Japan, Mexico or South Korea,” he said, “It’s certainly a market we would like to see grow, but they are certainly not our most important beef trading partner today.”

Schumacher said that crop acreage for wheat, barley and hay have stayed consistent over the last 20 years. But there has been one notable development in that time.

“The one big change we’ve seen in Montana agriculture over the last 15 years has really been this increase in pulses, the peas, the lentils, the chickpeas is where that’s rising,” he said, “You see it rising from less than one hundred thousand acres to about a million and a half (from 2004 to 2017).”

Schumacher said that number has dipped considerably to less than one million acres in the past three years, but it still represents significant shift in the state’s ag sector.

“We’ve also more recently seen about 40,000 acres of hemp being produced in Montana, so that’s something to watch going forward in terms of what the markets will look like for a sort of new and developing product,” he said.

Schumacher said the National Oceanic and Atmospheric Administration has recently put out a data that indicates Montana ag producers should be expecting above-average precipitation for the growing season but slightly below average temperatures.

During the question and answer section a member of the audience asked if there was data from the previous recession that would give them an idea of how the upcoming recession, which was predicted by multiple presenters at the seminar, will affect the ag sector. Schumacher said he hasn’t studied the specifics of the upcoming recession, but based on the data from the last one, Montana may not be as negatively affected as other states when it comes to the ag sector.

“The type of ag that Montana has historically participated in, we don’t carry as much debt as other kinds of agriculture areas,” he said, “so in that sense we’re probably better prepared.”

 

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