2008 may be a good farm year

High commodity prices will continue to fatten farmers' wallets in 2008, despite high production costs that won't go down, economist John McKissick predicted last week at the second annual Georgia Ag Forecast conference in Tifton.

The story of agriculture in 2007 was truly a "tale of two economies," said McKissick, director of the Center of Agribusiness and Economic Development at the University of Georgia.

While drought made headlines during 2007, the total value of Georgia agricultural commodities actually increased, to $10.5 billion, he said.

The state's largest single economy is extremely diverse, with more than 70 commodities, and four of them, including eggs and wheat, set price records last year, McKissick said.

On the other hand, the state's "green industry," urban agriculture, lost 35,000 jobs during 2007 due to the drought, while peach and fruit trees had a very bad year.

Interest rate increases have also hurt farmers, who are heavy borrowers, but the housing crunch actually has eased the escalation of land prices, McKissick said.

"Do you realize that in Georgia in three years, the average farmland value has more than doubled?" he said.

Commodity prices, including poultry, whose feed costs rose 35 percent in 2007, will continue to set records during 2008, he said.

"Fueling all of our crop price increases has been our continued and escalating production of ethanol from corn," McKissick said. "The increase is dramatic, and it's what is fueling all of our crop prices now."