Several of the Northwest’s big agricultural markets are seeing high yields but low returns this harvest season, says Spokane-based agricultural lender Northwest Farm Credit Services in its latest report.
Michael Stolp, Northwest FCS vice president of consumer insights, says growing conditions generally have been favorable, but some industries are struggling with a greater supply and low prices.
“This creates challenges for producers looking to manage their profits,” says Stolp. “We’re seeing this in wheat and cattle markets particularly.”
The report says the Northwest wheat market had above average yields, supported by timely seasonal rain. However, despite the fact that Northwest producers’ bins are full to bursting, low prices continue to squelch profits, remaining at or below the cost of production.
According to the report, the hay industry also saw favorable growing conditions, with strong production and old-crop inventory carryover continuing to challenge prices.
Similarly, the report indicated the cattle industry continues to increase herd numbers and production, only to see the added supply depress prices. The report says dairy markets also saw milk futures slip this summer, weighed down by butter and cheese inventories, although lower feed prices are said to be softening falling milk prices’ impacts on dairy producers’ profit margins.
“On the flip side, we have seen some industries with greater supplies along with positive markets,” says Stolp. “Apples are generally expected to have strong yields and solid returns, as is the wine and vineyard industry.”
The report shows this year’s new apple crop is estimated to be Washington state’s second or third largest in history at 120 million to 130 million boxes.
Cherry and pear crops also were said to have fared well, with somewhat lower yields being offset by larger fruit size and quality.
Meanwhile, grape harvest yields continue to be strong, with demand being driven by consumer interest in high-quality wines, the report indicated. Buyers of wineries wanting to shore up fruit supply or purchase well-known brands also continue to drive mergers and acquisitions in the industry.
Meanwhile, Stolp says the Northwest’s row crops continue to produce average yields overall while prices remain low.
The report shows Northwest potato production as mixed, with Idaho reporting strong yields, while Washington potato yields were limited by high early season temperatures.
“Given the strong production in Idaho and more of an average production in Washington state, prices for uncontracted potatoes are at or near producer’s breakeven price,” he says. “Without that assurance of a contract, current prevailing prices are low.”
Overall, Stolp says, “Harvest in the Northwest has progressed well, supported by favorable weather and available labor for most commodities.”
Northwest Farm Credit is part of a nationwide group of cooperatives that provides more than $10 billion in financing and other services to farms, ranches, and natural resource businesses in Montana, Idaho, Oregon, Washington, and Alaska.
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