The outlook for Georgia’s farm commodities is mixed for 2005 but mostly good, according to the most recent Georgia Farm Outlook and Planning Guide.

Despite the effects of three hurricanes, most Georgia row crops still performed well this past year, although fruit, vegetable and pecan crops were damaged. Prices for major row crops such as cotton, corn and soybeans trended downward during 2004.

The price outlook for 2005, according to the guide, is generally stable and possibly higher for most of Georgia’s major row crops, with cotton being the exception. Corn and soybean prices could be improved from 2004 levels while peanut prices are expected to stay at last year’s levels.

Farmers suffered through high fuel costs during 2004, and the outlook for 2005 promises much of the same, according to the report. Farming operations will be impacted by higher fertilizer costs, continued high fuel prices, and — for some crops — increased seed and technology costs.

Livestock operations generally enjoyed a very good year in 2004 thanks to lower feed costs and high prices, and the outlook for this year also is favorable. Cattle and hog prices are expected to remain high while broiler and egg operations also should enjoy another good year.

Farmers will see higher interest rates in 2005 compared to 2005, states the guide. Farmers — especially those on cropland with acreage base and payments eligibility — will continue to be pressured with high land rent in 2005 just as in 2004.

Georgia’s fruit, vegetable and pecan industries were severely damaged by hurricanes this past year, and prices for some commodities escalated as a result. However, prices are expected to return to more normal levels this year. Meanwhile, the demand for floriculture and nursery crops is expected to increase.

Looking to the general U.S. economy, the Georgia guide says continued economic expansion is expected for this year. Gross Domestic Product (GDP) is forecast to increase by 3.7 percent, according to composite reports by Oxford Economic Forecasting, International Financial Statistics and the International Monetary Fund that is released by USDA. This compares to a normal rate of 3 percent and an increase in 2004 to 4.4 percent. These increases greatly surpass GDP growth rates of below 2 percent during the most recent recession.

The Selig Center for Economic growth at the University of Georgia predicts core inflation, excluding food and energy, will rise to 2.5 percent this year compared to the 2-percent rate in 2004. Energy prices are expected to recede from 2004 levels. However, tighter conditions of supply and demand in many commodity markets, depreciation of the dollar, and increased labor costs will exert upward pressure on the overall general price level.

World GDP, according to the USDA report, is forecast to increase by more than 3 percent, with the greatest increases occurring in Asia and the transitional economies of Eastern Europe. World GDP growth in 2005 would be less than in 2004, but comparisons indicate substantial increases over the period of world economic downturn that characterized the early years of this decade.

Rising incomes in world markets are beneficial for U.S. production demand. The recent depreciation of the dollar is forecast to continue in 2005, but projections by USDA indicate that the exchange rate will remain high by historical standards. This does not favor greatly increased exports of U.S. agricultural commodities.

USDA forecasts U.S. production of red meat and poultry to increase by 2 percent in 2005. Consumption also is expected to increase, but the world production increases for beef, pork and poultry are expected to surpass consumption. The result is a general decline in U.S. farmer prices received for meat commodities. A predicted decrease in ending stocks for been in 2005, however, would maintain the higher U.S. price levels experienced in recent years.

Ending stocks for most U.S. crops are expected to increase in 2005 from 2004 levels. World crop production increases for the marketing year ending in 2005 will lead to downward pressure on crop prices. In terms of bulk volume, greater exports are expected in 2005 than in 2004, primarily due to increased corn and soybean exports.

Lower prices in 2005, however, lead to a USDA forecast of decreased export values in 2005 for wheat, corn, soybeans and cotton. Pork and dairy exports are expected to remain strong while poultry increases slightly. Import value increases in 2005 for fruits, vegetables and beef continue the expansion of recent years.

USDA baseline projections for 2005 net farm income are optimistic. Lower commodity prices are expected to lead to only modest reductions in income. Overall prices received by farmers will be lower than in 2004 but still favorable for most commodities compared to the early 2000s. Projections are for farm production expenses to increase by less than the general rate of inflation.

Prospects for Georgia agriculture correspond to that of the nation, according to the report. Although there are no expectations of increased prices in 2005, prices for most commodities with the greatest aggregate importance to Georgia producers are expected to be higher than in the early years of the decade.

Rising incomes in the developing and transitional economies should benefit demand for Georgia poultry exports.

High world cotton production and international policies do not favor improved cotton prices, but world demand is expected to remain strong. Peanut prices received should continue well above the loan rate, which could lead to the further shifting of Georgia crop acreage into peanut production.

e-mail: phollis@primediabusiness.com