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Posted on Jan 27, 2018

New year presents fresh opportunities for Northwest growers

Agricultural producers in the Northwest saw a mixed bag in 2017, with good harvests of apples and grapes but lower yields on pear acres. Much of the cherry crop did not generate a profit, but good demand is expected for apples and good sales for wine, according to Northwest Farm Credit Services.
The company, which describes itself as an $11 billion financial cooperative with customers in Montana, Idaho, Oregon, Washington and Alaska, provided the following highlights for Northwest agriculture on Jan. 9 – some of the company’s quarterly snapshots among commodities that the company finances.

Potato production decreased 6.6 percent across the Northwest on fewer acres and lower yields. The 12-month outlook suggests grower returns will remain above the cost of production for the remainder of the 2017 marketing season due to limited supplies.

The Northwest apple crop estimate for the 2017 crop year was revised up and is now the second largest on record. Smaller crops from the U.S. East Coast, Canada, Mexico and Europe should increase demand for Northwest apples. The profitability outlook remains strong for growers with varieties that match changing domestic consumer tastes.

The 2017 record cherry crop overmatched demand, and two-thirds of the crop generated little to no profit for the season. The profitability outlook shows slight profits for cherries marketed before the Fourth of July. Cherries marketed after the holiday returned below break-even returns. Planted cherry acreage and cherry crops have increased over the last 30 years, and 1,114 new cherry acres were planted in Washington state in 2016.

The Northwest pear crop for the 2017 crop year is projected to be 17.1 million boxes, the smallest since 2006. Some production decreases are due to less pear acreage. However, the reason for reduced yields is unknown. Although prices are up for Bartlett and Bosc crops, shipments are slower than five-year averages, and pricing pressures will occur if shipment pace doesn’t pick up. The outlook shows only slight profits for the industry.

Washington’s 2017 wine grape harvest is abundant, although estimated at slightly below last year’s record crop due to smaller fruit clusters. Oregon’s harvest is anticipated 5 to 10 percent larger than last season’s because of high yields and large clusters. For wineries, the new tax bill is good news, granting tax rebates on the first 750,000 gallons produced. Wine sales, especially for the direct-to-consumer segment, remain strong. The outlook indicates robust profits.

Wheat and pulse crops
Wheat prices remain around breakeven on large global stocks. India, a large buyer of Northwest pulse crops, imposed an unexpected import tariff on peas, lentils and garbanzo beans, all grown in rotation with wheat. Reduced exports to India are likely to lower overall profitably. The 12-month outlook suggests low wheat prices are likely to persist in 2018, with higher prices constrained by record world production and high ending stocks. Profitability will also be lower due to reduced revenue from rotation crops such as peas, lentils and garbanzo beans.

Onion prices remain well above year-ago levels as fewer acres and a shorter growing season limited production. Prices for medium-size onions should remain moderate in the face of adequate supplies. Producers with a supply of large onions will remain profitable.

Those in the cattle industry are optimistic as calf prices remained unseasonably high through fall 2017. Despite continued growth in cattle and beef inventories, enduring domestic and global U.S. beef demand provide continued tailwinds. The 12-month outlook suggests slightly profitable results as exports and domestic demand continue to outpace a growing supply.

Alfalfa hay exports remain strong, growing an additional 227,000 metric tons year over year. Northwest hay producers benefit most from growing Chinese demand, up 93,000 tons. Dairy hay stocks are adequate as milk prices fall and domestic demand slows. The 12-month outlook suggests alfalfa and timothy producers will remain slightly profitable.

The strong U.S. economy is boosting sales for the nursery/greenhouse industry, although tight labor availability is constraining industry growth. Younger generations prefer smaller, lower-maintenance yards, which is causing a shift in the industry to meet their demands. The outlook calls for solid profits.

By Post-Register Staff