SALEM - Once again, Oregon agriculture is faced with a mixed bag of economic indicators. Newly released statistics show Oregon's net farm income for 2001 was down 30 percent from the previous year, to nearly $266 million. That's the lowest bottom line for the state's farmers and ranchers since 1983. But a closer look at the big picture shows that agriculture continues to make a profit while generating high quality food and fiber products for Oregon consumers and markets around the world.

"We certainly acknowledge there are many producers out there who have faced some extremely challenging times," says Phil Ward, director of the Oregon Department of Agriculture. "This is not a surprise. Agriculture is not immune to the same general economic conditions that have affected profits in other industries. Despite these new numbers, there are signs that indicate agriculture remains a vital and leading contributor to the state's economy."

The value of agricultural production in Oregon is at an all time high - $3.75 billion for 2001. Agricultural exports are on the rebound, increasing 4 percent from the previous year and remaining a solid No. 2 among all Oregon industries. Some commodities have done very well this past year, including nursery products, Christmas trees, dairy products, and hay among others.

Such economic indicators provide strength to the long-term outlook for the industry. And as the overall economy improves, there is every reason to believe agriculture's bottom line will improve as well, ODA reported.

Brent Searle, ODA analyst, sees the latest statistics as evidence that agriculture is in an adjustment period.

"Agriculture is facing a number of global factors that have impacted other manufacturing and export-oriented sectors such as the Asian recession and the high value of the U.S. dollar," Searle said.

The latest figures from the U.S. Department of Agriculture's Economic Research Service show the continuing roller coaster ride for Oregon farmers and ranchers. In 1990, the net farm income stood at $514 million. It hit highs of $653 million and $641 in 1993 and 1997 respectively. Those peaks were countered by low points in 1995 ($403 million) and 1999 ($325 million). The 2000 net farm income of $377 million was a modest increase from the previous year.

While prices for many commodities remain low, expenses for Oregon producers continue to climb.

"At $785 million, the cost of agricultural labor is once again the single highest expense to Oregon farmers and was up six and a half percent last year," Searle said.

Labor costs have risen more than 100 percent from a decade ago, while the value of crops and livestock in Oregon has grown 43 percent.

"The impact of increasing power rates on agriculture affected producers as well, going from $54 million in 2000 to $78 million - a 44 percent jump. All these expenses play into a farmer's bottom line," Searle noted.

Expenses also include property taxes, pesticides, fertilizers, feed and seed costs, fuel and oil, and maintenance and repair of farm equipment.

Another factor in the bottom line is on the revenue side. One category that has provided farmers and ranchers significant income in the past is farm forest products. This includes timber on the farm that is harvested and sold to supplement a producer's income. That money maker is not showing up as much.

"During the 1990s, there was substantial harvesting of those trees," says Searle. "That has dropped significantly. This past year we saw less than $200 million of forest products sales off of farms which was as high as $500 million a few years earlier. That reduction in income also led to the lower net income figure."

Federal government payments to farmers also decreased significantly. Oregon does not receive as much support payments as many other states, but producers who traditionally get price support didn't see as much as crop yields were down for some commodities. Specifically, wheat production in Eastern Oregon was severely impacted by drought conditions. Federal payments were down 24 percent last year - a $32 million reduction. This was partially offset by crop insurance indemnity payments.

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