Farm income looks good but cost concerns emerging

LINCOLN, Neb. (AP)--The U.S. Department of Agriculture's latest farm income forecast suggests Nebraska's agricultural businesses will do well in 2008, but the state's farmers are likely to do much better than the ranchers and feedlot operators.

But farmers aren't finishing the year worry-free because falling commodity prices raise new concerns about next year's profits.

The USDA predicts that farm income nationally will be $86.9 billion in 2008, which is slightly higher than the $86.8 billion record estimated for 2007.

University of Nebraska-Lincoln agricultural economist Bruce Johnson says weakening demand for ethanol and exports make the outlook beyond 2008 less rosy. And the combination of rising costs for things like fertilizer while commodity prices are falling could make 2009 unpleasant for many farmers.

"What we're doing is entering a time of extreme uncertainty and risk like never before," Johnson said. "And I do believe that means, 'Be very, very cautious.'"

Nebraska Farm Bureau Federation president Keith Olsen says 2008 will still be a good year for crop producers from a financial standpoint.

But there is a lot of concern about costs, particularly fertilizer and feed cost.

And corn prices have slumped from around $7 per bushel toward $3.30. Olsen said at that level, farmers who irrigate are losing money.

But Jeff Stolle of the Nebraska Cattlemen said all of 2008 has been dismal for beef, pork and poultry producers because of high feed costs.

With about a month to go, 2008 ranks as one of the worst in Stolle's 17 years at the Cattlemen's Lincoln office.

"Quite frankly, it's a mess," Stolle said. "There are good quality cattle exiting feed yards right now losing $200 a head."

Stolle said feed costs have improved over the last three months, but most cattle are fed for four to six months before slaughter.

"So we've got cattle on feed that ate some very high-priced grain," he said.

12/8/08
6 Star Midwest Ag\3-B

Date: 12/3/08

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