18-lancaster Farming Saturday, August 23,1986
Dl
r
gl Brockett’s Ag Advice
Kt iM By John E. Brockett
V Farm Management Agent
Lewistown Extension Office
Looking Down The Road
Last week I gave my impression
of what will happen with farm
input expenses in the future. In a
way that was the “good news.”
Now for the bad news. Most farm
commodity prices will be soft,
which means they will not be very
good over any extended period of
time. A combination of low prices,
adverse weather conditions,
overwhelming debt, and taxpayer
revolt will probably erode the
ranks of full-time commercial
farmers.
Traditionally farmers have
never paid enough attention to two
areas of their business. One of
these areas is cost of production.
The second one is marketing. The
first one is easier to control on the
part of the manager. The second
one is controlled by a number of
factors, most of which can not be
influenced by an individual farmer
or even a small group of farmers.
However, marketing knowledge
must be part of management’s
responsibility. Marketing facts
should have a bearing on
SBA Extends Hours For Flood Victims
LANCASTER - The Small
Business Administration has
announced additional hours in
order for individuals to apply for
federal loans due to the July 26,
flash flood in Lancaster County.
They will be accepting loan ap
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AARON B. BEILER
Box 195 Route 1
South Vintage Road
Paradise PA 17562
FISHER ENGINE
SERVICE
3141 Old Phila Pike
Bird In Hand PA 17506
GOOD S STORE
R D 2 Box 33A
East Earl PA 17519
(717)354 4026
SPRING GARDEN
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RD 1
Kmzer PA I 7536
STOLTZFUS REPAIR
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Star Rt Box 318
Rebersburg PA 16872
RIDGE REPAIR
BEILER ENGINE DAVID A. FISHER SHOP
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production and financial
management decisions.
Milk is one of the biggest sources
of farm income in my area of
central Pennsylvania. Milk prices
have dropped rather dramatically
in the last few years. The net price
for milk now is between 10 and 11
dollars per hundred. In the next
four to five years, it will probably
slip down to an area between nine
and ten dollars. In the near future,
milk may go up once the
assessment comes off in the fall of
1987. This increase will be partly
offset by a reduction of the support
price, which will affect the blend
price for Pennsylvania milk.
Overall in the next few years,
dairy farmers will see a reduction
in prices that will exceed those of
the late 50’s and early 60’s.
Blame it on the government (for
past dairy programs that en
couraged too much milk
production or for present
programs that cut things off too
rapidly), or on dairymen from
other parts of the country such as
plications from 9 a.m. to 6 p.m.
from Monday, Aug. 18, through
Friday, Aug. 29,1986.
The SBA is headquartered at the
East Hempfield Township
Building, 1700 Nisstey Road,
Landisville.
BEILER ENGINE LEROY’S REPAIR SENSENIG DIESEL
REPAIR SHOP SHOP SERVICE
RD 2 Box 74 303 Queen Road RD 3 Box 97
Christiana PA 1 7509 Gordonvdle PA 17592 Selmsgrove PA 1 7870
“ SMUCKER REPAIR BEILER’S REPAIR
RDABoxMA SHOP "° 3 165 A
Honey Brook PA 19344 R 0 180x94 Milton PA 1 7847
Strasburg PA 1 7579
SHIRK’S REPAIR LAPPS SHARPENING
SHOP STOLTZFUS ENGINE SERVICE
R D 2 Pool Road SERVICE R D 2 Box 276
Ephrata PA I 7622 244 7 Sturnptown Road Myerslown PA 17067
(717)859 2797 Bird In Hand PA 17505
(717) 786 8788
California or Wisconsin, or on
consumers who do not drink
enough milk, or on those who
opposed milk advertising and new
product research in the past, or on
anyone else. It makes little dif
ference who was at fault in the
past, the fact is that there is more
milk being produced in the nation
than there is demand for that milk.
The dairy buyout program may do
nothing for milk prices, but it sure
has hit the cull cow and beef prices
pretty hard at times. Look for cull
cow prices to stay low for the next
few months, then fluctuate as the
second and third waves of buyout
cows hit the market. By the fall of
1987 we should see a return to
normal marketing of cull cows.
Grain prices will probably stay
depressed until the 1990’s unless
the Midwest runs into a prolonged
drought such as the Southeast is
having right now. By then much of
the marginal land, that came into
production during the boom years
of the 1970’5, will be out of
production, either via government
set aside programs or because it
will have been deemed as un
profitable for farming. Some
people feel that it will be loss of
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R.D. #2, Box 8
Newburg, Pa. 17240
717-423-6794
farmers that will turn prices
around. Actually loss of farmers in
the grain business would have very
little effect on the price of grain. As
farmers go out of business, other
farmers generally expand to use
their land. The turn around in
grain prices will come when and if
demand ever catches up with
supply. That can only happen if
yield per acre goes down, number
of acres goes down, or usage in
creases.
Fish is “the new kid on the
block" as far as the red meat in
dustry is concerned. Today nearly
all fast food places sell fish. It was
not too long ago that beef was the
only, or at least the main, meat
sold by many fast food places. The
fish competition has hurt red meat
prices. It will continue to compete
for a larger share of the red meat
market. This will hasten the in
tegration of the swine industry.
Once pork is primarily a con
tracted commodity, prices will
become more stable, management
will become more a function of the
integrator, and farmers will
become laborers and technicians.
Is that all bad? Not necessarily,
because the pork producer will
have records kept for him or her.
This will lead to a more efficient
industry. Beef will be more dif
ficult to integrate, but it will come
in time. Results for the beef in
dustry will be similar to what
happened in the poultry industry
and what is already happening
with the pork producers. Mean
while both pork and beef producers
who are interested in making a
profit raising livestock must
determine their cost of production
so they can either (1) reduce it, (2)
unite and fight it, (3) go out of
business because the cost can not
be reduced to equal price, (4) use
forward contracting or hedging to
“lock in” profits or reduced losses,
or (5) a combination of two or
more of the above.
Farm commodity prices in
general will be depressed for
several years unless a disaster hits
a major production area (such as a
drought in the Midwest, a major
disease of dairy cattle in
Wisconsin) It is unfortunate that a
disaster in one area is needed to
make other area farmers
profitable. Watch the poultry and
peanut industry prices during this
next year following the major
drought and hot weather in the
Southeast.