OREGON STATE UNIVERSITY

1997 Northwest agricultural outlook generally good

12/27/1996

CORVALLIS - Producers of most Pacific Northwest agricultural commodities -particularly those in grass seed and processed vegetables - can look forward to a good year in 1997, according to regional economists.

That's the conclusion they reached in producing the 1997 "Pacific Northwest Agricultural Situation and Outlook."

On the other hand, the report suggests that beef and dairy producers will do little better than hold their own in the coming year.

The report is published jointly by the three regional Land Grant universities: Oregon State University, Washington State University and the University of Idaho. It contains a series of articles by economists from those universities on the performance of the U.S. and Pacific Northwest economies, and the economic prospects for northwest agricultural commodities.

A big reason for the economic stability enjoyed by northwest agriculture over the past few years is the continuing expansion of the national economy. This expansion, now entering its 70th month, is the third longest on record in the post World War II era and is helping maintain consumer confidence while keeping any hint of a recession out of the economic picture, economists say.

"The 1990s expansion is expected to progress and mature in 1997, with improvements in employment opportunity and modest but stable gains in personal income," said Gary Smith, WSU Extension Service economist.

The world economic expansion will continue, the economists predict. The economies of industrial countries are expected to grow about 2.5 percent in 1997, and developing countries, about 6.2 percent.

The U.S. Department of Agriculture forecasts that national agricultural exports, which totaled $60 billion in sales in 1996, are likely to decline by more than 3 percent in 1997, primarily due to corrected world shortages in grain and oilseed inventories.

The Pacific Northwest Agricultural Outlook offers these forecasts for the region's major commodities: WHEAT AND FEED GRAINS: Increased production of all grain types in the United States and overseas will increase world grain stocks and exert downward pressure on prices. Even so, grain prices will remain volatile.

HAY AND FORAGES: Economists expect continued steady northwest hay production, level exports and firm demand from dairy, beef and horse sectors to keep hay prices strong through the 1996-97 feeding period. GRASS SEED: Northwest grass seed growers are looking forward to a good year in 1997. Prices remain strong and production steady for most grass seed varieties.

TREE FRUITS: Northwest apple prices are expected to fall slightly from last year's levels due to a near record apple crop in Washington. Pear prices are expected to increase significantly due to decreased pear production both nationally and in the region.

SMALL FRUITS AND NUTS: High world production and inventories of hazelnuts have kept prices low. With an average world crop, and decreasing inventories in 1997, prices should stabilize. Strawberry production decreased due to scaled-back plantings. Prices are expected to remain near last year's levels. Decreased production and carryover stocks of raspberries should stimulate some strengthening of prices in 1997. Strengthening demand and increased production of cranberries makes 1997 look like another good year for cranberry growers. Decreased production for both blackberries and blueberries will bring high prices.

PROCESSED VEGETABLES: Firm prices for corn, snap beans and green peas are forecast in 1997 due to decreased 1996 production and continuing strong domestic demand for processed vegetables.

POTATOES: Increased acreage and record high yields for the 1996 crop will exert downward pressure on prices in 1997.

MEAT ANIMALS: Although beef production declined slightly in the final months of 1996, beef prices will remain low. On the bright side, decreasing feed prices will help ease production costs for producers. Pork producers enjoyed a good year in 1996 and expect more of the same in 1997. Sheep and lamb prices hit record highs in 1996 and will remain strong in the new year due to decreased production.

DAIRY: Northwest dairy production should continue modest growth. Although milk producers can expect lower average milk prices next year, decreasing feed prices may allow a more favorable milk-feed price ratio.

GRAPES: The price outlook for northwest Concord grapes is good due to a regional decrease in production. Wine grape production decreased in Washington and increased slightly in Oregon while sales remain strong due to continuing high demand for premium northwest wines.

A limited supply of the 1997 "Pacific Northwest Agricultural Situation and Outlook" are available at no charge. To obtain a copy, write: Publication Orders, Extension and Experiment Station Communications, OSU, 422 Kerr Administration, Corvallis, OR, 97331-2119. Enclose 25 cents for each copy beyond six.