Agriculture battles inflation, land prices

Supply, demand rule agricultural pricing

FORT COLLINS – Agriculture remains big business in Northern Colorado, but it is a business that is changing and not always keeping up in value with inflation. And in many areas along the Front Range, it also is a business that is competing with strip malls and housing subdivisions for land that is rapidly increasing in value, while bucking fluctuating livestock and commodity prices that sometimes are right out of the ’50s. The total value of crop and livestock production has grown over the last 15 years, according to The Northern Colorado Business Report’s Leading Agricultural Indicators, a new quarterly report in the newspaper. But those values have not grown as steadily as the Gross Domestic Product or the Consumer Price Index. Total value of crop production rose from $256 million in the two counties in 1980 to $283 million in 1995, a growth rate that was only a fifth of the GDP and a 10th of the rate of change in the CPI. Livestock production increased from a value of $107 million in 1981 to $144 million in 1996, a 35 percent increase but an increase only 60 percent of the increase in the Gross Domestic Product and a third of the increase in the CPI. “When you look back at historical trends on pricing, it still is dependent more on supply and demand than inflationary practices,” noted Bob Hamblen, a Colorado State University Cooperative Extension Service extension agent for agriculture and farm management in Larimer County. “Prices for a lot of the crops, whether it be barley, corn, alfalfa, hay or whatever, are really based more on supply-and-demand price swings, and that’s probably true for beef, pork and lamb as well,” he said. Hamblen has been tracking Larimer County’s agricultural industry since 1971. He has seen plenty of change over the years and expects to see plenty more in the future. “That’s one of the nice things about a job like this – it’s not a stagnant industry, it’s an ever-changing industry,” he said. Probably the greatest change has been along the bustling Front Range corridors – Interstate 25 and to a certain extent U.S. Highway 85 west to the mountains – where rapid urban growth is competing with agriculture for land, water and supremacy. From 1969 to 1992, nearly three million acres of Colorado farmland was taken out of production – from 36.7 million acres in the 1969 agriculture census to just under 34 million acres in the 1992 census. Much of that has occurred in high development areas along the Front Range. In Larimer County, land in farms shrank from nearly 422,000 acres in 1987 to under 382,000 acres in 1992. Weld County appears to be bucking the trend, because from 1987 to 1992, it actually increased its acreage in farmland, from 1,885,554 to 1,904,504. But those figures are deceiving, because they include land put into production through new irrigation systems in eastern Weld County. West of U.S. Highway 85, much of Weld County is experiencing similar growth as hit Larimer County earlier. Hamblen said the figures also don’t show that much of the land taken out of production was among the best and most productive farmland. In other cases, land might still be classified as agricultural, but it has been broken down from productive 160-acre units into 35-acre ranchettes devoted mostly to grazing horses. An example: the Harmony Road corridor on Fort Collins’ south side, once prime farmland and now fast becoming residential and commercial subdivisions. “I’ve seen property go for as high as $20,000 to $30,000 an acre there,” Hamblen said. “There’s no way that could ever be used for agricultural production.” Even within rural areas of Larimer and Weld counties where agriculture is still viable, agriculture is changing. Perhaps the greatest changes have been the relative decline of sheep and lamb production and the rise of sunflowers as a cash crop. In 1981, cattle and calves accounted for the largest segment of value of production in Larimer and Weld counties, with a value of $35.3 million and 33 percent of the total livestock value. But milk cows were right behind, with a total value of $33.8 million, or 32 percent of the total. Sheep and lambs accounted for 22 percent of the value in 1981, at $23.3 million, followed by beef cows at $6.5 million, 6 percent. Hogs and pigs at $4.1 million and chickens at $3.8 million accounted for the remaining 7 percent of value of production. In 1996, milk cows were tops in value of production at $54.8 million, 38 percent of total value, while cattle and calves remained steady at 32 percent of the total value, $44.7 million. But sheep and lamb production had fallen to 13 percent of the market with a total value of $18.8 million, while hogs and pigs had increased in value to grab 13 percent of the total value at $18.3 million. Beef cows were valued at $5.2 million in 1996, 4 percent of the total value of production, while chickens were negligible at just $607. According to Hamblen, the decline in sheep and lamb values in Northern Colorado mirrors a decline nationwide, brought on since World War II by national changes in eating preferences. Nationally, people are eating more chicken than beef now, and lamb is at the very bottom of the list. “They’re fighting an uphill battle in trying to get an increased national market share,” Hamblen said, though there is potential for serving ethnic populations on East and West coasts who do like lamb. “It’s more of a specialty market, a niche market, but it’s probably not growing as fast as some of the others.” Another change noted by Hamblen has been a national and Colorado trend toward larger farms and ranches, especially in dairy operations where traditional dairy herds of 60-80 cows have given way to large corporate operations milking more than 2,000 head. Other trends include more specialization in feedlots, like Monfort. But judging from recent developments in precision farming and biotechnology, like cloning, change isn’t over for Northern Colorado’s important agricultural industry.

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