Value of Oregon Ag Down for 2009

Oregon ag value down last year; encouraging signs for 2010.

Published on: Oct 12, 2010
Reflecting the struggling U.S. economy, the bottom line for Oregon farmers and ranchers last year was dismal.

"New farm income dropped 41% last year form 2008, making it the lowest mark in seven years," says Brent Searle, Oregon Department of Agriculture analyst. "If any of us think about taking a 40% cut in pay, that's pretty staggering."

New economic information released by ODA shows net farm income at just under $563 million in 2009. The latest numbers continue the downward trend of net farm income in Oregon since 2004's record high of $1.3 billion.

"Oregon is part of a national agricultural economy that has been affected by the same pressures influencing all sectors," says Searle. "Hopefully, we have bottomed out and a turnaround is underway."

Net farm income is the amount retained by producers after paying their bills. It is considered an important indicator of the overall health of the farm today. The number does not account for payments on land purchases, family living expenses or health insurance.

"What's going on right now is following past patterns," says Searle. "A downturn isn't anything new, but the magnitude of last year's net farm income drop is significant."

It will be late summer next year before the 2010 balance sheet is finalized for Oregon ag income, but with more than half the year gone, early forecasts indicate income improvements, says Searle.

"I think it will be better for Oregon agriculture," he says. "We are seeing signs of stabilization in the dairy industry and some spikes in grain due to events around the world.  There are signs that some of these commodity prices have stabilized.

"The question is whether the expense side has stabilized."

Encouragingly, expenses farmers have incurred for inputs such as pesticides, fertilizers, fuel and electricity were down across the board in 2009, he explains. "In this economy, farmers were more prudent in using these manufactured inputs.

"They were careful about how much they bought and used. Both the price of these inputs and his volume were down in 2008. That certainly softened the blow a little bit.  The net farm income for Oregon last year would have been even more bleak had these costs been higher."

What remains in question is whether farmers are compromising yield and quality as a result of reduced inputs. If so, the real bottom line for Oregon agriculture could be even lower.

Labor continues to be the No. 1 cost for producers in the Beaver State, although farm worker compensation fell 2% last year, down for the first time since 2001. Just how this impacts on Oregon's overall economy is undetermined, but it likely has a downward affect.