Farmers across Georgia are in crisis, and it’s not new. The
beginning of the farm crisis here, as well as many other states,
can be traced back to 1996, says a University of Georgia
expert.

"U.S. farmers had a false sense of prosperity in 1996
when they were exporting products to other countries whose
economies
were booming," said Fred White, an agricultural economist
with the UGA College of Agricultural and Environmental
Sciences.

The Boom Didn’t Last

"Farmers and policymakers expected that great boom to
last," he said, "but it didn’t, because it relied on
an overextended credit line."

After 1996, many Southeast Asian countries entered a severe
recession.

"They couldn’t purchase our products as they had before,
and our farmers began to suffer the consequences," he said.
"The new Freedom to Farm Bill was introduced in 1996, too,
and this ended supply controls and farm programs as we have known
them. Our farmers entered the free market."

White
says many of today’s low commodity prices can be linked to weak
total demand and oversupply of most major commodities.

Farmers are getting some relief with federal programs, but
White says farmers can’t bank on this support continuing forever.
"The free market structure of the Freedom to Farm Act has
not been replaced and until it is, farming will continue to be
financially unstable," he said.

Georgia Commodities in
Trouble

Each of Georgia’s commodities is experiencing troubled times,
some more drastically than others.

"The cotton industry is competing against imported cotton
and textile products, and against man-made products," said
White. "The acreage is stable, but profits are highly
dependent
on the amount of exports and government payments."

The peanut crop is also struggling to compete against imports.
"It looks like Mexico will eventually be able to bring
peanuts
into the U.S. and not have to pay any tariffs," said White.
"If free trade is extended to Latin America, Argentina will
also be able to import their peanuts with no tariffs."

Tobacco acreage prices and values have fallen over the past
three years. The loss of tobacco quotas continues to hurt farm
profits.

"Overall, soybean production has been very high, but this
results in low prices," said White. "Our state has had
very low yields because of the drought."

He said the same is true of the grain prices on crops such
as wheat and corn. Increased production and stocks of grain have
depressed prices," said White.

Meats Rely Highly on Exports

White said the three meat products, beef, pork and poultry,
are all dependent on the export market. "In 1998, hog prices
were the lowest since the great depression," he said.

Georgia cattle farmers are reducing their herds and prices
are improving for this product. "Pork profits are still in
the negative due to low prices over the past few years,"
said White.

White said the dairy industry may soon see some positive
changes
as Congress is reforming the pricing system for milk. "It’s
likely that Georgia farmers will benefit with higher prices and
consumers will see more stable milk supplies," he said.
"Dairy
production in south Georgia is growing because they are selling
to the Florida market."

Marketing and Management Keys to Future
Success

Cash flow problems are a major concern for farmers during
crisis
years, said White. "Farmers make production decisions at
the beginning of the year, not knowing what will happen at
harvest,"
he explained. "They are trying to stay current on their
operating
loans, but their net worth may be decreasing and other loans may
be falling behind."

White says greater emphasis should be placed on marketing and
financial management as the future success of Georgia farmers
depends on their ability to reduce risks. "Farmers are
dealing
with more risks under the current government program than
previously.
In order to reduce risks, farmers may diversify, use futures
markets,
forward contracting, irrigation, etcetera," said White.
"Some
farmers are making the decision to farm part-time and work a
non-farm
job part-time in order to reduce risks and continue to farm
."

Despite the current farm crisis, White is optimistic about
the future of agriculture in Georgia. "Farmers who can
remain
efficient and properly manage their risks will make it,"
he said. "I believe the long-term prospects for Georgia
agriculture
are very good."