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Commodity markets boosting mood of Southeast growers heading into 2013 production season

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• Despite the fact the elected officials in Washington, D.C., seem intent on throwing a kink into the crown jewel of the U.S. economy, most farmers seem to think that petty politics is insignificant when compared with the current state of commodity markets.

It’s always interesting to watch the behavior of farmers during the winter meeting season, a period of time that runs mainly from January through February and then trails off as March approaches.

It’s a time for renewing old acquaintances, tasting every manner and form of barbecue, and hopefully, for learning something that’ll translate into a more profitable production season.

While most of these meetings routinely include some type of economic outlook, even the most casual observer of human nature can tell a lot about the upcoming season’s forecast just by watching the demeanor of the farmers who attend.

There’s a lot more laughing, talking and joking than usual at this year’s gatherings, with “jovial” being a good one-word description of the participating growers.

Despite the fact that our elected officials in Washington, D.C., seem intent on throwing a kink into the crown jewel of the U.S. economy, most farmers seem to think that petty politics is insignificant when compared with the current state of commodity markets.

You can check current commodity prices now.

If you didn’t know better, you’d think farmers had given up hope that politicians could agree on anything, even a farm bill that promises billions in budget savings. Or maybe they’ve come to the realization that the success of agriculture has less and less to do with public policy here in the U.S. and more to do with world markets.

After all, while Congress has dithered away countless opportunities to pass new farm legislation, there hasn’t been the specter of a fiscal cliff for farming. In fact, the entire sector has done quite well.

The urgency of feeding seven billion people apparently has made domestic politics less relevant, and that’s a good thing.

This point was made abundantly clear during this year’s Georgia Ag Forecast, when Kathe Falls, director of International Trade for the Georgia Department of Economic Development, pointed out that 95 percent of the world’s consumers and 92 percent of the globe’s economic growth currently lie outside the United States.

One of every three acres on U.S. farms is now planted for exports, says Falls, an indication of the tremendous amount of export activity in which agricultural companies are engaged. The past two years, she adds, have been record-setting for Georgia exports, and the state now ranks 12th nationally in dollar value of exports.

This past year marked the first time the Georgia Department of Economic Development has taken an in-depth look at international markets for the state’s agricultural products, says Falls, and the results were revealing, to say the least.

The leading countries (based on dollar value of exports) that purchase Georgia’s agricultural products can be grouped into three tiers, she says, and all the countries in these tiers have purchased at least $200 million in Georgia’s agricultural products during the timeline of the analysis — 2006-2011.

“Our No. 1 export market is Canada, responsible for 18 percent of Georgia’s agricultural exports,” says Falls. “Not only has Canada purchased more than $2.1 billion in agricultural products, but this market has increased 92 percent during the timeline.”

Georgia’s second leading export market has been China, with its purchases of $957 million during the timeline, she says. Although China’s exports have declined 44 percent during this period, Georgia’s agricultural exports to Hong Kong have increased 971 percent.

“We believe Hong Kong is a gateway for Georgia’s agricultural products into China,” she says. “In addition to being Georgia’s fourth-largest export market for agricultural products, Hong Kong has been Georgia’s second fastest-growing export market for agricultural products.”

The third-largest market has been Mexico, which has purchased more than $810 million in Georgia agricultural products. This market steadily increased its purchases until 2011, when it experienced an 11 percent decline over the previous year.

“These top four export markets — Canada, China, Mexico and Hong Kong — make up the top tier, accounting for 39 percent of Georgia’s total agricultural exports during the timeline,” according to Falls. Russia and Japan make up the second tier of countries, each accounting for between $330 million and $381 million, or 3 percent each, of Georgia’s agricultural exports and purchases.

Trinidad and Tobago, Vietnam, Venezuela and the Dominican Republic comprise Georgia’s third tier, each purchasing between $219 million and $284 million in agricultural products, and each accounting for 2 percent of the market share.

Vietnam’s increase of 2,543 percent during the timeline clearly makes it the fastest growing among markets, purchasing more than $200 million in agricultural products from Georgia, says Falls.

All of this is creating a literal “world” of opportunity for agricultural exporters.

(As the year began, cotton and peanut interests were anything but jovial. But a lot has happened recently. For the latest cotton outlook, see Joe Nicosia: Don't count cotton out just yet. A flood of peanuts from the huge 2012 crop was a big burden on the market until China began making waves with huge purchases. That information can be found at Chinese peanut buying spree quickly changing industry dynamics).

phollis@farmpress.com

 

 

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