The Georgia farm economy is expected to follow the lead of the national economy in 2004 and continue to make improvements, according to the most recent Georgia Farm Outlook and Planning Guide.
The annual guide, published by the University of Georgia College of Agricultural and Environmental Sciences, predicts that U.S. economic expansion will exceed the 3 percent seen this past year, and U.S. Gross Domestic Product (GDP) should grow at about 4 percent. The guide also cites a long-range study from Georgia State University predicting continued growth above 4 percent for 2005.
World economic growth, states the study, is forecast by USDA at levels similar to the U.S. rate, with larger growth rates expected for developing countries and the transition economies of Eastern Europe.
World ending stocks of grains and oilseeds are expected to be lower in 2004 than in 2003. This differs from the U.S. situation in that only rice stocks are expected to decline in the United States in 2004. Correspondingly, U.S. farm prices for grains other than rice are not predicted to increase in 2004 from the levels seen this past year.
A decline in U.S. soybean stocks, however, should lead to an increase in farm prices this year. World and U.S. stocks of cotton are expected to end lower in 2004 than ending stock levels in 2003.
U.S. agricultural exports are expected to increase in 2004, but imports are expected to increase by an even greater amount, with a resulting agricultural trade surplus decreasing to $9.5 billion. The value of U.S. exports is forecast to increase mainly due to higher prices for cotton, soybeans and beef. The depreciation of the dollar in international trade markets is forecast to continue in 2004, and U.S. exports will be more competitive in world markets.
Long-range forecasts from USDA indicate rising net farm income through the decade, due primarily to increased exports. Gross cash receipts for crops and livestock are forecast to increase due to increased domestic demand and exports.
Government payments should decrease as a portion of total receipts, according to the report, as the marketplace becomes relatively more important over time for gross cash income. Low interest rates should benefit debt management and enhance asset accumulation for agricultural producers. Production expenses are expected to increase modestly at a rate lower than general inflation.
Georgia agriculture, says the report, is affected by circumstances in world markets. World demand for broilers will benefit Georgia producers in 2004, although stable prices will accompany modest export gains. U.S. cotton prices should remain strong in the upcoming year due to tight world supplies.
U.S. exports of vegetables, horticultural products and tree nuts should increase slightly in 2004. Productivity and net farm income are relatively high in Georgia when compared to other states, according to the guide. As net income improves in the U.S. agricultural economy, economic conditions in Georgia also should improve during the coming years.
Both the national and Georgia farm economies are expected to continue to realize improvements in their financial conditions through 2004, states the report.
Among Georgia farms, farm business assets by the end of 2003 were projected to be valued at about $29 billion. Outstanding farm debt will reach $4 billion and will account for about 14 percent of the aggregate farm asset value. Notably, the state’s debt-to-asset ratio in 2003 remained below the national level, a four-year trend that began in 2000.
The outlook continues to be encouraging for farm equity in 2004. According to USDA estimates, the average value of Georgia farmland in January 2003 was $2,500 per acre, which increased by 8.7 percent from $2,300, the appraised value 12 months earlier. This appreciation trend is expected to continue in 2004.
More promising outlooks for livestock and crop farms will be translated into increases in the market value of farm assets and the accumulation of more farm equity funds. Higher farmland values also will be attributed to expanding non-farm income opportunities as the economy starts to gain growth momentum in its struggle to recover from recession.
The farm credit environment, says the report, will remain conducive to farm business growth. Favorable farm and on-farm income prospects will enhance the farm borrower’s debt repayment capacity, minimize the probability of loan delinquencies, and allow farm lenders to maintain healthy financial positions.
The guide speculates that short and long-term interest rates will remain low by historical standards in 2004 to encourage more substantial increments in consumption expenditures and investments.
More attractive farm operating loan rates are expected to be available in 2004 while optimistic economic projections indicate that farm mortgage rates possibly could go up towards the end of next year if not in the early part of 2005.