Agriculture feels economic crunch

COLUMBIA — An MU economic study projects net farm income will decrease by 20 percent by the end of 2009.

The predicted $18 billion decrease means national farm income will drop to $71 billion from $89 billion. The report, released by MU's Food and Agricultural Policy Research Institute, expects net farm income will not reach 2008 levels again before 2013.

The study cites 2008 as the worst financial year for hog producers since 1998. While 2008 pork exports tripled from the 2001 levels, the input costs of pork production still exceeded the income, which provided additional strain on producers.

“It’s been an unpleasant year,” said Don Nikodim, executive vice president of the Missouri Pork Association.

Nikodim and other industry leaders listened Wednesday as the economists shared their outlook for agriculture.

Consumers, however, can expect food prices to remain stable for 2009, the report stated. Food inflation reached an all-time high in 2008 at an increase of 5.5 percent; for 2009, food inflation is not expected to exceed 2.7 percent.

Economists say agriculture will continue shifting.

“The roller coaster we’ve been on is not something we’re expecting to be off of anytime soon,” said Lori Wilcox, program director of research and operations for the research institute.

Wilcox attributes this volatility to several factors, including the general economy, uncertainty of petroleum prices, commodity prices and input costs.

With a lot of focus on the future, John Hagler, director of the Missouri Department of Agriculture, addressed an audience of more than 100 with his vision for Missouri agriculture.

“This state can never move forward unless agriculture moves forward,” Hagler said, referencing a statement Governor Jay Nixon made recently.

On a national level, legislators and industry groups listened as the economists presented the same findings in Washington, D.C., last week. Scott Brown, the research institute's dairy and livestock program director, said this annual report offers lawmakers the right tools to make policy decisions.

“The base line is there to be the yardstick in which we measure the policy change off of,” Brown said. “We’re standing back saying, ‘Here’s what the numbers tell us. Take this and make the best possible decision.’”

The Columbia-based institute has offered economic expertise to Congress since 1984. The joint venture between MU and Iowa State University is also connected with several other universities through projects on a national and international level.