According to many producers, cotton may be heavily planted this year. And for the most part, soybeans are out of favor. But farming woes__including the three factors farmers have no control over: insects, price, and the weather__extend further than row crops in 2001. Even though Delta farmers have been plagued with drought conditions and unfavorable market pricing in the last two years__a trend experts expect to continue in 2001__increased energy costs have concerned farmers. For many, another bad year may bring an era of family farms to a halt. Because the price of natural gas, the principle ingredient in nitrogen fertilizer, increased from $3.75 per thousand cubic feet to just under $10 by the end of 2000, fertilizer prices have more than doubled. Diesel fuel prices followed the pattern of crude oil, jumping to more than $1.20 per gallon last fall. "I have asked our congressional delegation to look at ways of providing relief at the national level, for what I hope will be only a temporary increase in energy costs," says Dr. Lester Spell, commissioner of the state department of agriculture and commerce. "There is no way that the farmer could have predicted these higher costs and planned in their operating budgets to deal with them," says Spell. "The spike is so unusual as to constitute a disaster, that while not a natural disaster, it's a disaster nevertheless. The delegation's response has been positive and I am expecting this Congress to respond to expand assistance for this emergency situation, in terms of loans, and more importantly, direct assistance." But there's good news, too. Despite low prices, the catfish industry is predicting a good year, thanks to low feed prices__a result of the soybean glut of 2000. And land prices have remained steady, even reflecting a slight increase since 1999. Even though salesmen for seed, chemical, and equipment companies are concerned about the lateness of sales for the 2001 season, it's primarily because of delayed planting decisions by farmers__and not a lack of business. Last October, Congress approved a $78 billion farm bill, which provided $3.6 billion in disaster assistance and other election-year aid to farmers. In the bill, more than $2 billion in federal aid was earmarked for farmers who suffered crop losses in excess of 35% of their historic yield to drought this year, with compensation possible as early as the first quarter of 2001. The bill also called for relaxed policies concerning the 38-year-old trade embargo against Cuba. The "Law of Diminishing Returns" Mantra For Row Crop Producers Prices for almost all crops are predicted to remain status quo or decline in 2001, says Fred T. Cooke, Jr., an agricultural economist at the Delta Research and Extension Center (DREC) in Stoneville. "After last year, some farmers quit farming because of declining net worth after the last few years of low prices compounded by the heat and drought," he says. "Costs are significantly increased and we are about to have an energy crisis on our hands. The law of diminishing returns says that when the price of a commodity goes down, you should cut back on your inputs. That will hurt agricultural suppliers, raise unemployment and probably sales of retail goods." Already, non-irrigated soybean land and rice land has been converted to cotton, but several products, such as Bt cotton and Roundup Ready, will reduce input costs, Cooke says. "You'll probably see a widespread use of those two technologies and also a lot of skip row cotton because of the reduced production costs and only a slight reduction in yield," he says. Earl Shipp, general manager of United Agri Products in Memphis, which develops and distributes crop production products and services to growers in the U.S., Canada, and various foreign countries, says growers should concentrate on marketing efforts to compensate for increased prices and decreased commodity prices. "Farmers have done a good job growing crops but they need to improve on the marketing part," Shipp says. "I still think the future is bright for agriculture, it's a great place to be, it's just going through a tough time right now." Matt Dale, president of Agricultural Information Management, LLC in Sumner, says sales of hardware and software for precision agriculture, yield monitors, GPS systems, and mapping and recordkeeping, have doubled each year since the company opened in the mid-1990s. Last year, sales tripled despite an economic slowdown in the ag industry. "Because farmers end up with huge amounts of data, we collect, archive, process, and analyze the agricultural data for them to make their farming operations more efficient," says Dale, who is partners with Robert Mehrle, president of Mid-South AG Data, also in Sumner. "When budgets tighten, information is invaluable." It's Anybody's Guess: Industry Vets Say Cotton Prices Could Go Up, Down, Or Hold Steady According to the National Cotton Council of America's U.S. and World Cotton Economic Outlook, the cost of producing cotton will rise substantially for the 2001 crop if price increases in diesel fuel and natural gas are maintained. "For a typical U.S. cotton grower, this could increase production costs by perhaps $30 to $40 per acre," says Dr. Kent Lanclos, assistant director of NCC's Economic Services. "However, the impact of these costs will be even greater for corn production__with its higher fertilization and drying requirements__so more acres might be induced into cotton than would have been otherwise this coming season." During planting of the 2000 crop, large parts of the south were in a drought for the third consecutive year. With the exception of areas in Alabama, Georgia and south Texas, drought conditions in the major cotton production areas, such as the Mississippi Delta, were not regarded as severe. Despite flat upland cotton prices, waning farm program benefits, and rising fertilizer/energy costs, U.S. cotton producers intend to plant 15.9 million acres of cotton this spring, up 2.3% from 2000, according to the National Cotton Council's 18th Annual Early Season Planting Intentions Survey. If realized, this would be the second largest upland plantings since 1962, trailing only the 16.72 million acres in 1995. Cotton acreage in Mississippi is estimated at approximately 1.5 million acres, a nearly 14% percent increase. In Arkansas, cotton acreage is estimated at 1.1 million, a 14.6% increase, and in Tennessee, it's estimated at 650,000 acres, a 14.1% increase. "Cotton prices, according to most, should stabilize this year," says Spell. "Some even suggest a slight increase. Hopefully, we will avoid the lower yields and lower fiber thickness that we experienced last year from the abnormal periods of heat and dry weather." Meredith Allen, vice president of marketing at Staplcotn in Greenwood, says it's too early to predict what the market will bear. "It's wide open on cotton," he says. "We don't have a good handle on what we'll have, just because of the crop insurance program. In a two-week period (in February), prices deteriorated badly, and a lot of farmers were rethinking acreage. There are numbers all over the board on what kind of acreage increase we'll have__anywhere from 5% to 20% in the mid-south and southeast. Over the next 12 to 18 months, it's going to be hard to have any strong prices. If we have an average yield on the kind of acreage we're talking about, we're probably going to have depressed prices." Row Crop Farmers Looking To Increase Efficiencies "With costs of production in most areas increasing, and prices for the farmer going up only marginally, if at all, staying in business means squeezing out every cost center that you can," Spell says. "Reducing tillage, increasing acreage, using better seed, less fuel, or simply planting crops requiring fewer inputs__all are factors that the 2001 farmer must consider when he makes his decisions as to what to plant." Charles Coghlan, a farmer from Scott, plans to plant 3,000 acres each of cotton and soybeans. "We've got good varieties of cotton and soybeans to work with, the rainfall situation is still 10 or 15 inches behind, but the markets are going to have to improve or we're going to have to have some more help from the government," Coghlan says. "Soybean prices are horrible, but I'm going to stay about like I did last year with them. I'm not going to plant any rice unless the price improves dramatically between now and planting time. I could convert some acreage back into rice." Nolen Canon, a farmer from Tunica, and chairman of the board of the U.S. Rice Producer's Association, says the outlook for rice in 2001 is "not real sporty." "The economic outlook is fairly cloudy right now," he says. "There is some switching of acreage into other crops in various regions but basically it boils down to the price for rice right now is so depressed that it is probably driving some people from the rice industry. But alternatives, such as soybeans, are not much better." From 1999 to 2000, rice acreage in the Mississippi Delta dropped about 30%, says Dr. Joe E. Street, plant physiologist for DREC in Stoneville. "The USDA estimated acreage at 218,000 acres, with much of the acreage shifted to cotton because of the profit potential with the cotton program," Street says. "In December, I predicted that rice acreage in Mississippi in 2001 would increase by 15% to 20% if commodity prices remained similar to December levels. The impact of high nitrogen and fuel prices, plus the attractive cotton program, may keep rice acreage from increasing as much as predicted." Lemont was the most common variety of rice grown in Mississippi last year. It accounted for 60% of total acreage. The Priscilla variety was grown on 27% of all acreage, and Cypress on 5%. Cocodrie, Jefferson, and Wells were each grown on less than 5% of the acreage, with yields from new varieties looking very good, Street says. "New higher yielding rice varieties will help increase per acre income," Street says. "New varieties such as Cocodrie, Priscilla, and Wells average 15 to 20 bushels per acre more than Lemont. The hybrid rice line, XL6, yields even better than the conventional varieties. However, straw strength and milling yield may limit its acceptance on a large scale in Mississippi until advanced varieties are released. Lemont is expected to remain an important variety because of its consistent performance and marketability. Although the new varieties may yield better than Lemont on most farms, they are not perfect varieties and may not fit everyone's situation." With current rice prices, reducing production inputs is a key to success, Street says. "Careful management and practices such as reduced tillage or fall tillage, and side inlet irrigation are helping reduce costs," he says. "Most growers are producing rice with minimum inputs and research is continuing to explore other avenues to reduce production costs." Kenneth Hood, co-owner of Perthshire Farms in Perthshire, and president of the Delta Council, plans to plant all Roundup Ready cotton on 90% of total acreage, and milo and sorghum on the remaining 10%. He does not intend to plant soybeans this year. "If I was a football coach, I'd punt," Hood says. "We're sitting on a bombshell right now in agriculture with prices where they are. Input costs are going up so much that we can't recover operational expenses." Catfish Producers Casting Wide Nets Mississippi continues to lead the nation with nearly 60% of total U.S. catfish acreage__followed distantly by Arkansas, Alabama, and Louisiana__and produces about 72% of catfish produced nationally. In addition, the state processes roughly 75% of the nation's fish. With total sales approaching $300 million, catfish has risen to Mississippi's fourth largest commodity in dollar volume. The Mississippi Delta, which contains 96% of the state's 91,000 catfish pond acres, continues to dominate that sector of the agriculture industry. Humphreys and Sunflower counties contain more acres of catfish ponds than any single state in the nation. "The catfish industry has benefited from lower feed costs this past year, and expanding markets will be the key to its continued success," says Spell. Henry Gantz, president of The Catfish Institute in Belzoni, says catfish demand increases during Lent, and during the late spring and summer grilling season. "Last year, we thought fish would be short at Lent, so we were a little more cautious in our promotions," Gantz says. Delta catfish processing plants and feed mills are thriving. Dick Stevens, president of ConFish, Inc. in Isola, which recently completed a $5.4 million expansion project that will increase annual live weight by 30 million pounds, upping its capacity to more than 100 million pounds a year, says even though the catfish industry is in a down cycle at the moment, it's expected to plateau and swing back up. "At the end of the year, the net result will look a lot like last year," Stevens says. Danny Walker, CEO of Heartland Catfish in Itta Bena, which will wrap up an expansion this spring to increase its capacity from 135,000 pounds to 250,000 pounds per day, says new technology in the catfish industry is "greatly improving efficiency." Solon Scott, president of America's Catch in Itta Bena, says processing improvements are in the works. "We won't be running more pounds, just improvements to breading and marinating," Scott says. Keith King, president of Dillard and Co. Inc., in Leland, says higher fuel prices hurt the bottom line but feed prices should remain reasonable this year and the next. "There are several issues lurking though that could affect that," King says. "One of our biggest problems is still the cormorants and pelicans." Hugh Warren, executive vice president of Catfish Farmers of America, says a new line of catfish by natural selection introduced this year will benefit catfish producers. "This new line is being released to 34 hatchery operations in five states," Warren says. "One of the major characteristics is that they grow a lot faster, and this will enhance profitability. These are two- and three-year old brood fish that will be certified and should be showing indications of transferring the improved traits from the experiment stations to commercial production within a year or so. Some will be spawning this spring." Even though the catfish industry is faring well overall, producers have been unhappy with low prices. Scott Gaston, general manager of Silver Creek Plantation in Belzoni, says he was disappointed with last year's low prices and expressed concern that the marketplace "has taken unfair advantage of growers." "Every other market is supply and demand driven and we feel like the buyers are taking advantage of processors by outmaneuvering them," Gaston says. "The processors are going to get their percentage so the ones who eventually get hurt are the growers, because the processors just back their price down on the pond bank. Today, fish is 70 cents a pound and that's ludicrous. We would not be able to turn a profit right now on fish farms were it not for the price of soybeans being down, making feed prices low." Even though computer software to assist commercial catfish production has been around for nearly two decades, researchers at Mississippi State University have developed a microcomputer program that will debut on April 1. Originally designed in 1981 as a DOS program, Fishy 2001 is now a Windows-compatible program, and catfish farmers will be able to record, analyze, and produce reports to keep track of fish numbers, feedings, weights, and sizes. After its launch date, the free service can be downloaded online at www.agecon.msstate.edu/wek/fishy.htm. "Since farmers generally cannot see their fish, they need Fishy 2001 to track fish growth over time, as well as keep records of feed fed, fish harvested, fish lost and fish moved," says Wallace Killcreas, Fishy programmer and agricultural economist with the Mississippi Agricultural and Forestry Experiment Station. Farm Equipment Manufacturers Spot Trends; Fuel Suppliers Deal With Uncertainty Kendall Lee, general manager of Amco Manufacturing, Inc. in Yazoo City, makers of farm field equipment, such as hippers, bedding hippers, ditchers, and levee plows, says after a three year slump, sales have picked up again. "Farmers who really made nothing two years ago are now needing to replace equipment," Lee says. "Many have decided to go from eight to 12 rows, which cuts down on the number of tractors and passes, and we've supplied them with equipment to cover more acreage per pass." Vernon Greenlee, president of Bostick Brothers Inc., fuel suppliers, says switching to no-till is cutting back on the number of trips required by tractors. "Fuel cost is just too high right now," Greenlee says. "Because we've had rain lately, it's brought preparation activity to a stop. Otherwise, farmers would be blowin' and goin'. If it dries up, farmers will be in the fields in a hurry. If not, it'll hurt our fuel sales." Last year, it was wet right up until planting time, Greenlee says. "If that happens again, they'll just come in and burn it down with chemical and plant," he says. "Last year, after the slow sales before planting, we probably put out more fuel than ever for irrigation just because it got so dry." Delayed Decisions, Increased Energy Costs Challenges For Seed and Chemical Companies Because energy costs are a tremendous challenge to seed and chemical companies this year, they will continue to face challenges__from regulators, energy sources, biotechnology and even farmers__that perhaps they could not imagine a year ago, Spell says. "The successful companies will not only have to define their course, but figure out how they can get ahead of it," he says. "The response (to increased energy costs) has been to either reduce production to contain costs or to continue production at the higher costs, with the farmer__you guessed it__paying much more." "This market has me and everybody else confused, and we don't know what it's going to do," says Pat Baker, buyer for Sayle Oil Co. in Clarksdale. Uncertainty in the marketplace about farmers' intentions on what and how much to plant has many suppliers scratching their heads. "What we're looking at right now is surprising," says Terry Dulaney of Dulaney Seed, Inc. near Clarksdale. "A lot of salesmen I talk to say there's a lot of indecision this year about what farmers are going to grow, and no one is getting much in the way of bookings. A lot of dealers I sell cottonseed to say that farmers are going to plant it, but haven't decided what varieties they want." Roundup Ready is gaining nearly 80% of the market share in soybeans, says Allen Morgan, director of strategic business development for Jimmy Sanders Inc. in Cleveland. "Orders are running ahead for some crops and behind for others," he says. "The herbicides have been flat anyway. Their share is off because of technologies. The market just won't bear it for them to raise prices." Steve M. Hawkins, president and COO of Delta and Pine Land Co., says farmers have "gotten off to a good start with winter rainfall." "We're optimistic that people will be capitalizing on the products__both conventional and transgenic - we have in the market," Hawkins says. One of several companies that consolidated last year, Zeneca Ag Products and Novartis Crop Protection, which merged and created Syngenta Crop Protection, Inc. last November, has been promoting its new products for 2001: Touchdown IQ, a glyphosate type product labeled for burndown on all crops and over the top of RR Soybeans, Cotton, and Corn; Gramoxone Max, a new 3.0 lbs ai/gal formulation for fast economical burndown of winter and summer annuals; Quadris fungicide labeled for cotton, soybeans, and rice; and Boundary herbicide, a combination of Dual Magnum and Metribuzin that offers excellent economical foundation residual weed control, says Sam Newsom with Syngenta. Crop Insurers See More Activity Compounded with an increase in electricity costs__the main energy source for cotton gins, feed mills, and grain elevators__many credit institutions have nudged producers to get crop insurance for cotton. With a Feb. 28 deadline, agents reported an increased interest in crop insurance__the majority covering cotton acreage, but with many farmers insuring rice, grain sorghum, soybeans, and corn crops. "Many farmers, particularly those who had minimum coverage last year, have increased their coverage," says Hal Towles, an insurance agent with Cottonland Insurance in Greenville. Because of increased government participation, crop insurance rates are down, Towles says. "We had a 25% credit last year and the government made that a permanent part of the premium rate," he says. Crop insurance comes in three types: Catastrophic, where benefits cannot be paid unless the crop is declared a total disaster; Multi-peril (MPCI), which guarantees a production amount; and Crop revenue coverage (CRC), which guarantees a dollar amount per acre. With CRC, the government assists with about 65% funding. Buzzy Cullum, a partner at B & R Crop Insurance Agency, Inc. in Marks, says the agency's five incoming phone lines were constantly tied up in February. "There were so many calls coming in because we've had two disastrous years in a row and the farmers cannot take another lick," says Cullum, also a farmer. "People who considered crop insurance a luxury are seeing it as an absolute necessity now. With the insurance we have today, it's just foolish not to farm without it." Land Prices Remain Firm "Although it may be hard to believe, investment grade farmland prices in the Delta remained firm throughout the past year, and when statistical data are released for the year 2000, average per acre sales prices will no doubt show an increase over 1999," says John M. Dean, Jr., ALC, CIPS, president and principal of LANDMART/Dean Land & Realty Co. in Leland. "This trend has appeared to extend into the new year, buoyed somewhat by apparent Congressional interest in assisting agribusinesses, crop insurance programs, and tax-deferred exchange sales. Catfish farm sales prices, however, have been flat to slightly softer over the past twelve months." Russell Black, broker and agricultural consultant for Capital Agricultural Property Services, Inc., says land prices are stable because of incoming investment capital. "There hasn't been a lot of movement in the price of ag land in a year or year and a half," he says. "Even though commodity prices are so low, land is holding its value pretty well." Because farming hasn't been profitable in the last couple of years, many landowners have used equity in their land to continue farming, Black says. "That's unfortunate," he says. "Hopefully, that can be turned around very soon. We haven't had a big increase in the number of people wanting to sell their land. There are some cases where people are deciding to get out rather than just keep losing money." DBJ