2016 Louisiana Summary: Agriculture and Natural Resources

Frances Gould  |  7/6/2017 7:52:29 PM

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Agriculture: Backbone of Louisiana’s Economy

This publication tabulates the value of Louisiana agriculture in 2016. Agents and specialists of the Louisiana Cooperative Extension Service, as well as other agencies – both private and public – compiled the data. Their analysis focuses on the animal, forestry, fisheries, plant and wildlife commodities that comprise our vital agricultural industry. Agricultural and natural resource industries contribute significantly to our state’s economy with the potential for increased economic benefits and job creation through value-added processing in urban and rural communities throughout Louisiana.

The production and marketing environments experienced in 2016 will likely make this one of the most challenging ever faced by producers. For many, the 2016 production year was just a continuation of the difficulties experienced in 2015 which saw excessive rains early in the year followed by drought conditions. Difficult production conditions began almost immediately in 2016 with the northern part of the state experiencing historic rainfall and flooding in March. Rainfall in excess of 30 inches fell in many areas of the state causing a multitude of issues for livestock and crop producers. Rains, while fewer and of lower magnitude, continued to persist from much of April and into May. This led to additional backwater flooding throughout much of North Louisiana. At the same time, excessive rains and flooding also impacted the Southeastern part of the state. While the severity and extent of the impact was significantly lower than experienced in the northern part of the state, it still created significant difficulties for many producers.

While June and July brought a return to more normal production conditions, it was short-lived as another round of historic rainfall and flooding hit the state in August. The southern part of the state felt the brunt of this weather event with many areas once again receiving

in excess of 30 inches of rain. And while not as severely impacted, the persistent rains that followed for much of September and into October created additional hardships for producers in the central and northern parts of the state as harvest delays impacted both the quantity and quality of agricultural commodities. The LSU AgCenter estimated that the total economic impact of the difficulties caused by the March and August floods and the persistent rains that followed was over $365 million to the Louisiana agricultural industry. Thankfully, weather conditions improved into October and helped create very favorable harvest conditions for many of the late harvested commodities. While the dryer harvest conditions for much of the remainder of 2016 helped harvest efficiency for some commodities, the negative impact of the excessive rains and flooding in August and September far exceeded any positives generated by the dry fall for most commodities.

By all accounts, the 2016 production year was extremely challenging for most agricultural industries. However, the exact nature and extent of the damage was highly influenced by the commodity’s stage of production at the timeof the adverse weather conditions. In some cases, the impact was not necessarily related to production losses but more related to quality losses and increased production costs. As such, there was a high degree of variability in average production levels experienced by different commodities in 2016. For some commodities like cotton, soybeans, wheat, grain sorghum, and sugarcane, yields were anywhere from 5 to

31 percent higher in 2016 as compared to the previous year. For some, like sugarcane, very favorable harvest conditions helped to generate near record sugar recovery and push total sugar produced per acre to high levels despite sugarcane tonnage being down. For others, the increase in yields in 2016 versus 2015 likely had more to do with the extremely low yields experienced in 2015 due to drought conditions than it did with strong productivity in 2016. In fact, for these commodities, while yields moved closer to average or typical yields, they were still at discounted levels to those experienced in 2014.

For other commodities, the impact of the adverse weather conditions definitely was reflected in estimated yields for 2016. Yields for corn, rice, sweet potatoes, and many fruits and vegetables were down considerably from 2015. Corn yields were down by nearly 5 percent as heavy rains delayed harvest and had both yield and quality impacts. Similarly, heavy rains and flooding delayed harvest, reduced harvest efficiency, and limited second crop opportunities for rice production. Total rice yields were down roughly 4 percent in 2016. Sweet potatoes were probably the most significantly impacted commodity as persistent rains delayed harvest and helped to reduce total yields by nearly 20 percent versus 2015. Excessive rains and flooding also created significant yield reductions for several fruit and vegetable crops with reductions for some commodities reaching as high as 30 percent.

Adding to the production difficulties were the stagnant or lower commodity prices experienced in 2016. Starting in the last half of 2014, commodity prices for many of the state’s large agronomic commodities began to experience significant downward momentum. This downward trend in prices continued in 2016 for many commodities. For others, while prices remain relatively unchanged from 2015, they continue to remain at severely discounted levels from those experienced just 3 or 4 years ago. For the plant commodities, rice, corn, grain sorghum, and wheat all saw significant reductions in prices in 2016. While cotton and soybean prices in 2016 were slightly higher than the previous year, they still remain at significant reductions from the period of strong prices in the late 2000’s and early 2010’s. Sugar prices

is one of the few commodities in which prices have been able to and continue to sustain at historically strong levels.

For animal enterprises, the largest reduction in prices were experienced by the beef cattle industry. After several years of record levels, prices for all classes of cattle experienced in 2016 were roughly half of the levels seen in 2015. While this sharp downturn in prices creates more challenges for the industry, cattle prices still remain at historically favorable levels. Milk prices continued to come under pressure and currently hoover at or below breakeven levels. The inability of milk prices to make a sustained move to more profitable levels continues to be a major factor to the trend of lower numbers of dairy operations in the state. Broiler production was one of the animal enterprises that did see marginally higher prices in 2016. However, prices for other sectors of the poultry industry, like egg production, saw slightly lower prices in 2016.

Finally, for the fisheries and wildlife enterprises, prices were generally mixed. Crawfish prices were up roughly 2 percent in 2016 as the industry continues to experience expansion

in both production and demand. Minor increases in prices were also experienced in the freshwater fisheries as well as for the oyster and farm raised catfish industries. However, prices for all of the marine fisheries industries were down in 2016 with shrimp experiencing the largest reduction at nearly 40 percent from 2015.

While the difficulties faced by individual commodities and producers can and did vary considerably in 2016, the general impact of adverse weather conditions and lower commodity prices was to reduce the total economic activity associated with the Louisiana agriculture, forestry, and fishery industries. The total gross farm value (the amount of revenue estimated to be generated by producers from the sale of their commodities) for the Louisiana agriculture, forestry and fishery industries was down nearly 9 percent from the previous year. Leading the way for the reduction were the animal enterprises which saw their collective gross farm value fall by over 23 percent from the previous year. The main culprit in this reduction was the sharply lower cattle prices experienced in 2016. Both the fisheries and wildlife enterprises and the plant enterprises saw their collective gross farm values fall by roughly 1 percent. For fisheries and wildlife enterprises, the reduction in the gross farm value of marine fisheries more than offset gains experienced in aquaculture production and hunting leases. Large reductions in gross farm value of rice, sweet potatoes and wheat led the way for the reductions experienced in the collective gross farm value for plant enterprises.

When the commodities produced by agricultural producers are cleaned, processed, and packaged at the next stages of the marketing channel, these value-added activities create additional economic activity over and above that defined by the gross farm value. In 2016, these value-added activities were estimated to have an additional economic impact of over

$5 billion. Taken together, the gross farm value and value-added activities were estimated to have a total economic impact of nearly $11 billion. Though the struggles of 2016 resulted in this number being a 8 percent reduction from 2015 and a 11 percent reduction from 2014, it is still undeniable that the state’s agriculture, forestry, and fishery industries are major contributors to the overall state’s economy. Cutting-edge research programs and extension education and outreach efforts of the LSU AgCenter remain critical to sustaining these economic benefits.

Many Louisiana communities depend on agriculture, forestry, fisheries and wildlife for local jobs and their economic well-being. However, for those who work in it day in and day out, agriculture, forestry and fisheries are far more than a business, a major job contributor and an economic engine. It truly is a way of life. Families have lived on many of these farms, forest lands or fishing villages for generations following a preferred way of life even though it means hard work, many hours, high risks and sometimes low incomes.

Each new production season has risks associated with commodity prices, trade agreements and higher input costs as well as uncertainty related to the weather. These conditions make the discovery and adoption of new agricultural technology developed by the LSU AgCenter more important than ever to our state’s producers. Agriculture is a highly sophisticated segment of the national and world economy, becoming increasingly so every year. That is the reason we at the LSU AgCenter continue to support agriculture and consumers with factual information provided by a well-trained faculty of extension agents, specialists and research scientists.

Those of us in the LSU AgCenter, with its major branches of the Louisiana Cooperative Extension Service and the Louisiana Agricultural Experiment Station, are proud to be part of Louisiana’s agricultural industry, and we are committed to serving that industry and the citizens across the state of Louisiana in the years ahead.

William B. Richardson, LSU Vice President for Agriculture

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