News Update

News Update
March 3, 2006

ECP Funds Available

Agriculture Secretary Mike Johanns announced today that the U.S. Department of Agriculture (USDA) is making $63 million in Emergency Conservation Program (ECP) funds available to assist agricultural producers struck by hurricanes in the Gulf of Mexico region during the 2005. This is the first allocation from $199.8 million available in ECP funds.

“USDA was on the ground providing food and housing assistance in the immediate aftermath, and we remain committed to the recovery,” Johanns said. “These funds are one more way we are reaching out to help Gulf Coast farmers rehabilitate operations damaged by last year’s devastating hurricanes.”

Producers in counties that were declared presidential or secretarial disaster areas due to 2005 hurricanes are eligible. Eligible agricultural producers may receive up to 100% cost-share to remove debris and restore fences and conservation structures.

For additional information and to apply for ECP assistance, eligible producers should visit their local Farm Service Agency (FSA) office. For more information on ECP and other USDA disaster aid programs, visit your local FSA office, or visit FSA’s Web site, http://disaster.fsa.usda.gov/fsa.asp.

FAPRI Predicts Increasing Costs for Farmers

U.S. farmers face an increasing cost-price squeeze in the year ahead, say economists from the University of Missouri-Columbia (MU). Farm production expenses that increased $28 billion in the past three years will jump another $7 billion in 2006. Rising energy prices, including fuel and fertilizer, made up $10 billion of the increase since 2002.

Costs also increased substantially for feed, purchased livestock, seed, repairs and interest payments, according to a 10-year baseline report released to the U.S. Congress by the Food and Agricultural Policy Research Institute (FAPRI).

FAPRI predicts that net farm income will fall by $16.8 billion in 2006 from 2005. Increased costs and falling crop and livestock receipts squeeze farm profits. Farmers face declining payments from federal farm programs throughout the baseline. Payments peaked at $23 billion in 2005 and are projected at $13 billion in 2015.

The FAPRI baseline will be used to analyze any changes in the Farm Bill to be rewritten by Congress by 2007.

The brightest spot in the baseline is demand for ethanol fuel made from corn. A new section of the baseline report was added for corn products. At current trends, ethanol demand will exceed corn exports by market year 2007-2008.

Along with fuel, ethanol plants produce corn byproducts for livestock feed. That feed already exceeds use of wheat, sorghum, barley and oats combined.

There will be more cattle to eat byproducts as the U.S. cattle herd expands, stimulated by higher beef prices since 2003. FAPRI projects a peak of more than 103 million head of cattle by 2012.

“As beef supplies increase, prices will moderate,” said Scott Brown, FAPRI livestock analyst. A 600-pound (lb.) feeder calf that averaged $120 per hundredweight (cwt.) in 2005 is projected at $84 per cwt. by 2012.

With increased meat supply and uncertain meat exports, particularly in beef, future livestock prices depend increasingly on U.S. demand. Beef exports to Japan and possible avian flu outbreaks are wild cards in meat price projections, Brown said.

— adapted from a University of Missouri-Columbia press release