Agriculture 1975 - Predictions
There seem to be no political
catastrophes brewing. Oil
prices appear to have
reached a point where they
can't get much higher. And
there’s even talk of a tax cut.
So, things don’t seem to be
getting a whole lot better.
But then, they don’t seem to
be getting a whole lot worse,
and maybe segments of the
farm market have bottomed
out.
“Good Managers
Will Surrive.”
We asked Lancaster
County Agent Max Smith
what he thought about the
prospects for fanning in
general, and he said he
thinks 1975 is going to be a
“challenge” for farmers.
“Management becomes
more and more important
every year,” Smith said,
“and this year it’s going to
be more important than
ever. High input costs and
depressed markets for
livestock products will
demand good management
of capital, land and labor.”
Smith said he was happy to
see the new farm tax bill on
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the scene, and hopes that it’s
provisions will be im
plemented as quickly as
possible. But he doesn’t
expect the bill itself to do
much to slow the exodus of
tancastcr County farmers
from their fertile lands.
“Farmers will continue to
sell their land to developers.
The farm tax could take a
little pressure off them, but
fanners still have to cope
with inflation and rising
costs, and many tunes the
only way to do that is to sell
out.
“But I think we’ve lost
enough farmland here in
Lancaster County. I think
it’s time to be satisfied with
what we’ve got. It’s time to
put a caution light on the
industrialization of our
farms.”
Milk Price Down,
Then Up
“Milk prices will probably
decrease until April, then
they’ll head upwards,” we
were told by Dr. Paul Hand,
the economist for Inter-State
Milk Producers Cooperative.
“In March, Secretary Butz
will have to set a new sup
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port level, which will have to
be higher than it is now. At
this point, it’s virtually
impossible to predict prices,
but I can say that prices
must be higher in 1975 than
they were in 1974."
Hand based his statement
on the assumption that the
government support level for
milk will likely affect the
prices which dairies pay to
farmers. The law requires
the secretary to set the milk
support price at 75 percent of
parity and last year the
support price was pegged at
$6.57. The new support price,
though, at the legally
mandated 75 percent of
parity should be around
$7.11, Hand said.
A $7.11 support level would
mean a $lO Class One price
for Federal Order 4
dairymen, and a blend price
of about $9.00 if Class One
utilization is 63 percent.
One factor which could
help dairymen is a bill
passed by both the House
and Senate and now beofre
President Ford calling for
milk support prices to be
pegged at 80 percent of
parity. This, according to
Hand, would put the support
price at $7.58. “I don’t think
we’re going to get that bill,
though,” Hand said. “The
Secretary of Agriculture, the
Council of Economic Ad
visors, and the Wage and
Price Board are all advising
the President not to sign it.
And that’s pretty stiff
competition.”
Even with higher prices in
the offing, Hand said, far
mers will still have to be
careful if they want to make
a profit in 1975. “The only
thing that will really im
prove dairy incomes is a
bumper crop of corn and
soybeans. Even with the
support price at $7.11 it’s just
not profitable for dairymen
to feed $3.50 or $4 corn.”
Beef
A 3-Year Slump?
The beef market is in a
slump and looks like it could
stay there for a few years.
Bill McCoy, president of the
Lancaster Livestock Ex
change told us. “I hate to
make predictions because
I’ve been shot down so often
in the last year,” McCoy
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incaster Farming, Saturday, jan. 4,1975
said, “but there’s just so
much beef around that 1
think we’re going to be a long
time getting rid of the sur
plus. And until we do, we’re
going to be seeing a
depressed market. Maybe
it’ll be this way for two or
three years.”
Although he doesn’t see
any big turnaround, McCoy
said he does think there’ll be
some beef producers,
especially locally, making
money in the cattle business.
“But they’ll have to stress
growhy cattle, good feed
converters.”
McCoy said local feeders
will be in a good position this
year to compete with the big
commercial feedlots in the
Midwest. “Our feeders use
their own com and their own
roughage, and they supply
their own labor. I think
they’ll be able to show a
profit where the feedlot
operator who has to buy $4
com won’t be able to. In the
past few years, small
feeders have found it tough
to compete with investor
owned feedlots, but I think
we’ll see the smaller
operations getting back into
control of the market.”
Could that mean a lot of
the bigger operations will be
scared away from cattle
feeding? Is “smart money”
going to find a new home?
“Feedlots have made a lot of
money in the last few years.
Sure, times are getting
tough, but the bigger
operations, the ones that
have been going for 10 or 15
years, are going to stay in
business. They’ve got the
capacity to weather this
depressed market and they
will. Seed feedlots that began
in the past two or three years
may go under, but the feedlot
is still going to be a factor in
the marketplace.”
Hogs-Lots of
Variables
Hog prices should be
better in the next six months
or so, we were told by Mark
Nestleroth, a Duroc breeder
from Manheim and a past
president of the Penn
sylvania Pork Producers.
“The big thing holding down
hog prices will be the beef
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price," Nestleroth said. “If
there’s too much beef, prices
will stay down no matter
what the supply of pork is.
The general economy, and
the size of our grain exports
will influence hogs, too. It’s
going to be an interesting six
months, but I think people
who stay in pork production
will be making some
money.”
Nestleroth pointed out that
live hogs are selling locally
now for 42 to 43-cents, the
highest in years. “Futures
for next summer are up to 49-
cents, and if that’s any in
dication, I think we’ll be
seeing 50-cent hogs here.”
He figures that prices now
are above a typical
breakeven level of 38 to 40
cents, but nothing to shout
about. “You still have to be
an awfully good feeder to
make money. If you’re
paying $l5O a ton for feed,
and you have a four-pound
conversion rate, you’ve got
30-cents a pound for the cost
to feed a pig from farrowing
tin fattening. That’s before
any of your other expenses,
which are going up all the
time.”
A Good Year for
Poultrymen?
Lower feed costs and
continued strong prices for
eggs and broilers should put
Pennsylvania poultrymen in
a pretty good profit position
for 1975, according to
Richard Ammon, executive
director of the Northeast
Poultry Producers Council,
Fairless Hills, Pa.
“I was in a meeting with
some economists from
Girard Bank just the other
day,” the man from Neppco
said, “and they expect all
prices to come down in 1975.
I think feed costs will come
down, and so will poultry and
egg prices. But I don’t think
they will come down as much
or as fast as feed, so
poultrymen could have a
wider margin to work with in
1975.”
Ammon was especially
optimistic about the turkey
growers in Southeastern
Pennsylvania, especially the
ones who grow, dress and
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