Skip to main content Skip to navigation

Cost of Farming Increases to be Small in 1997

PULLMAN, Wash. — The cost of farming in 1997 will be little changed from 1996, according to Oregon State University Agricultural Economist Bart Eleveld.

Writing in the 1997 Pacific Northwest Agricultural Situation and Output Report, Eleveld sees no major changes in the cost of farming, although some costs will rise a little and others will decline some.

Deregulation of electrical supply and prices is pushing Pacific Northwest electricity prices down. These prices should be stable for two to four years. Increases in prices farmers pay for electricity are expected to be less than the rate of inflation, thus lowering the real cost to farmers.

Although chemical prices rose two percent to three percent in 1996 and may increase about the same amount in 1997, Eleveld notes a cooling trend in farm chemical prices. Prices of some chemicals are falling because patents are running out on some popular chemicals and generic brands are much cheaper. Although prices for chemicals are increasing, farmers are becoming more cost conscious, often applying lower rates or hesitating to make applications.

Good farm prices and new equipment designs made 1996 a good year for farm equipment dealers. Sales were up 6 percent. Eleveld says sales should be good in 1997 even though prices will rise another 3 percent to 5 percent.

Farmers will pay about the same for gasoline in 1997 as they were paying at the end of 1996 until summer travel pushes prices up 5-10 cents a gallon.

Low inventories of diesel and fuel oil should drive prices up modestly through the first half of 1997 and then level off. Strong demand and low stocks could push propane prices up by as much as 20 percent by early spring.

Eleveld says qualified borrowers should have no difficulty obtaining financing at 8 percent to 10 percent interest throughout the year.

Farmers who buy or rent land will see higher real estate costs in 1997. Prices for good dryland wheat land and irrigated farmland rose as much as 15 percent to 20 percent in 1996. The average for all farmland was up about 8 percent. The 1997 increase is expected to be less than that.

Declining grain prices already have moderated the price of Pacific Northwest grain land.

Land rental rates are likely to rise in 1997. Farmers may find landowners demanding a share of government payments. In the past many landowners haven’t expected to participate in government payments. With high commodity prices, many now are viewing such payments as a windfall for farmers.

The supply of farm labor was generally adequate in 1996, but Eleveld sees uncertain prospects for 1997.

“The recent increase in border patrol personnel will surely have an effect on the supply of illegal aliens in the Pacific Northwest,” Eleveld said. “The current thought by many farm labor experts is that illegal aliens with counterfeit papers are still a significant source of labor in the vegetable fields, vineyards and orchards. If this is true, a significant decrease in the number of illegal aliens in the Pacific Northwest will likely create a void in seasonal farm labor that will not be entirely filled by domestic labor.

Eleveld expects the supply of qualified workers to provide full-time labor on farms and ranches to remain adequate throughout 1997.

The report was written by 40 agricultural economists and other farm and ranch experts at Washington State University, Oregon State University and the University of Idaho, and private industry. It was published Friday, Dec. 27, by the Capital Press.

– 30 –