A34-Lancaster Farming, Saturday, December 29, 1990
Farming Changes In 1990
(Continued from Pago A 1)
There have been world business
changes, such as the merging of
Ford New Holland and Italy’s Fiat
to form a world giant in agricultur
al machinery.
There have also been a number
of local farm-based businesses that
have expanded their lines of pro
ducts to cater to a widening
demand from customers who are
now both rural and urban.
Then there was the takeover of
Kuwait by Iraq, under Sadam Hus
sein, which resulted in condemna
tion and blockade of Iraq by the
United Nations.
The huge inflow of U.S. military
forces to Egypt, with no timetable
for withdraw!, and the huge poten
tial for war, has already affected
local farming.
One side of agriculture
benefitted.
Because U.S. troops need milk,
the U.S. government has con
tracted with an Egyptian business
to supply milk. However, the busi
ness needed cows and the Pennsyl
vania Holstein Association sold
about 500 bred heifers, which are
expected to freshen in spring.
On the other side, oil price
increases resulted from the Persian
Gulf aggression. Those increases
have come at a bad time, and on top
of the back of the oil price surge
that resulted from a huge oil tanker
spill off the coast of Alaska.
The large increase in fuel prices
has been passed onto farmers in a
number of ways.
Almost every agricultural sup
port or service business has raised
prices to farmers to cover the profit
loss due to increased fuel prices.
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And while dairy farmers had
enjoyed high milk prices for most
of the year, those gains were
quickly lost as milk prices dropped
almost $5 a hundredweight.
Some farmers have been losing
large amounts of operating money
because of the cut in milk price.
With the added support service
costs, it has been a cold Christmas
season, even if there has been no
significant cold weather or snow
until the last week of the year.
The only aspect of the year’s
events that seems to offset the
sharp decline in milk prices is the
low feed price that resulted from a
good growing season.
Many farmers have been chang
ing to alternative businesses to
help them through rough times.
They’ve been adding such side
businesses as greenhouses, road
side stands, organic farming,
warehousing, feed and grain con
sulting and venturing into sales of
agricultural products.
Still on the world level, local
impact is expected to be felt from
European changes.
The Soviet Union, in the throes
of reorganizing, is seeing wide
hunger and low food supplies. The
U.S. has extended a $1 billion cre
dit line to the Soviets for the purch
ase of agricultural products.
Poland is making faster head
way on the road to a free-market
system. Penn State officials expect
to be sending representatives to the
country over the next several
years, starting with 1991, to help
the Polish people usher in a work
ing extension system.
The Germanys re-united. The
effect of their agricultural produc
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tion practices on world trade and
local agriculture industry is yet to
be seen.
The General Agreement on
Trades and Tanifs (GATT) col
apsed on the issue of agricultural,
but there may be some hope. A ten
tative date of Jan. 15 for some talk
ing between U.S. and officials with
the European Economic Commun
ity (ECC) may occur.
However, Jan. IS is the United
Nations’ deadline for Iraq to with
draw from Kuwait.
According to John Zimmerman,
director of livestock marketing
with the Pennsylvania Department
of Agriculture, “It’s been a good
year and a bad year.”
Zimmerman and his staff travel
to Pennsylvania livestock markets
to grade animals for sale. They
report the sales, as staffing
permits.
“If you were in the beef in busi
ness, it’s been a good year, it
(prices) stayed up substantially
and they’re still high, both on the
feeder and finished end.
“Feed yards are having some
low prices, but locally, prices have
been real good this past fall, and
even now.
‘The hog business - that’s kind
of been up and down. It’s had the
‘yo-yo’ effect. It hasn’t been bad,
but not real good.
“In the sheep business, it’s been
a disaster. Wool prices have been
very low, very little demand. Lamb
prices have been low. Right after
the Easter lamb market they were
lower than usual and they didn't
respond (increase) the way they
usually do. In fact, at one sale, they
dam near gave them away. A lot of
people in the business are talking
about getting out,” Zimmerman
said.
There are about 30 auction
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markets in the state, and that num
ber has remained stable for the last
several years, though fewer and
fewer buyers are attending the auc
tion sales, according to
Zimmerman.
‘The markets are subject to
sharper rises or falls (in price) on
any given day,” Zimmerman said.
He said two major beef packers
operate within the state and they
are among the top 20 in the nation,
and there is one major pork buyer.
He said there are few hogs and
fewer slaughter cattle being sold at
auction, though “still a good per
centage of slaughter cows and
veal.”
Zimmerman said that world
trade and international relations
are more important to local
businesses than they have been.
“A lot will depend on what hap
pens in the Persian Gulf and with
GATT,” Zimmerman said. “Those
things are more of a common
denominator (to Pennsylvania
agriculture) than local conditions.”
Though interest rates are very
low, the U.S. economy is in a
recession, by most experts'
accounts.
The huge financial blunder of
the savings and loans industry and
Congress, and now the failures of
strip-malls and business parks
have hurt the reserves of many fed
eral banks, putting pressure on the
FDIC and a crimp on lenders’ abil
ities to make secured loans.
However, according to Michael
Firestine, vice president in charge
of agricultural lending at Lebanon
Valley National Bank, despite the
huge failures, the downturns in the
housing and real estate industry,
and the precarious position of the
FDIC, agricultural banking
appears to be on solid ground.
“As far as Ag lending, what
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we’re looking at is a downward
trend in interest rates,” Firestine
said.
‘The control of the currency has
been pressuring the banks to be
prudent in the lending practices,"
he said.
However, Firestine said he
observed some differences in far
mer banking and spending over the
past year.
“With all the money the farmers
were making in 1990, we didn’t
see a lot of new farm machinery
loans, which is really surprising,”
Firestine said. “I think the farmer
has been mote cautious, thinking
that they’re receiving psuedo
prices. I think they (farmers) are
more cognizant of it (economic
instability) than in the past because
they have seen these roller coaster
prices.”
To help with lending projections
for the coming year, for the past
dozen years, Firestine and his staff
often seek the advise of Louis
Moore, marketing specialist at
Penn State University.
“A lot of times, what we’ll do, is
we’ll give Lou Moore the
wizard of economics a call and
see what kinds of trends he looks
for in cattle prices and hog prices.
And he even goes so far as to
extend himself to dairy prices,”
Firestine said.
“It gives us a feel for maybe
what the future holds and helps ui
in doing some projections,’’ he
said.
According to Moore, while
many livestock producers might be
feeling the effects of a recession in;
1991, poultry producers, especial'
ly broilers, will be enjoying a ban- 1
ner year.
"Total meat consumption for 1
1991 will reach a record high, with
(Turn to Pago A 35)
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