Agriculture takes a hit in 2000

The year 2000, the cusp of the new millennium, brought with it a host of hopes and fears, but for Northern Colorado farmers and ranchers the year was one of drought and economic challenge.

Ironically, 1999 had been one of the wettest years in Colorado history, but the fall of that year was dry across most of the state and the winter of 1999-2000 followed with below-average snowfall and above-average temperatures, according to a 2003 report by Colorado State University-based atmospheric scientists Nolan Doesken and Roger Pielke. The drought hit its zenith in 2002, when Gov. Bill Owens observed, “It looks as if all of Colorado is burning today.”

Even by the summer of 2000, drought was in full swing across the state. Crops withered and grasslands for cattle grazing virtually stopped growing and turned brown.

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An agricultural downturn had already begun in 1999, according to local economist John Green. He noted in an economic forecast for 2000 that there was an oversupply of cattle and a milk shortage. Other experts predicted that the region’s dairy industry would be a rare bright spot for Northern Colorado agribusiness that year.

Since the beginning, the Business Report had been reporting on the twin trends of a robust residential development market pushing up land prices and the dwindling amount of land in agricultural use. The 2002 USDA Census of Agriculture reported the acreage devoted to farming in Weld County had dropped 4 percent since 1997, while the market value of production was down a whopping 13 percent.

This was a real concern for the local economy, because Weld County was – and still is – the state’s largest agricultural county. Conservation easements gained popularity with ag landowners beginning in 2000.

Greeley plays its water card

As 2000 got under way, the area’s largest agribusiness – ConAgra – was in the midst of deciding where to relocate its new company headquarters. The Greeley-based company, which owned the Swift & Co. beef processing plant in Greeley with about 3,700 workers, was eyeing either a Greeley location or one at the Global Technology Center – now known as Centerra – near the intersection of Interstate 25 and US Highway 34 in Loveland.

Most of the betting was on the Loveland location, but by summer 2000 the company announced it would build its new headquarters at Promontory in west Greeley.

The decision to stay in Greeley was made after city officials offered ConAgra $2.3 million in direct financial incentives along with 1,000 acre-feet of water each year at $2,200 per acre-foot for 99 years.

The deal was a sweet one for ConAgra as the going rate for water from the Colorado-Big Thompson Project at the time was between $12,000 and $17,000 per acre-foot. Greeley would play its water card again in 2008, using it to lure Leprino Foods to town to build a new cheese production facility.

ConAgra had acquired Swift & Co. in 1989 and merged it with Monfort Inc. to form the Monfort Pork Division. In 1994, the division is renamed Swift & Co., headquartered in the new $13.5 million, 105,000-square-foot Promontory building. A Dallas-based private equity firm – Hicks, Muse, Tate and Furst – bought Swift from ConAgra in 2002 and sold it in 2007 to Brazil-based JBS S.A., which then acquired the Promontory office for its management personnel.

Between 2004 and the sale to JBS, Swift saw exactly one profitable quarter, as a result of the ban on beef exports to Asia in the wake of cases of mad-cow disease.

Jobs, crop slump

Jobs in agriculture were becoming scarce in 2000, and in February, economist Green predicted a somewhat dire future. “Agriculture is probably going through its worst time right now and will only begin to get better as it becomes a niche market,” he wrote.

Signs of an agriculture slump could be seen as the year unfolded, with the price of sunflowers – one of the region’s top crops – dropping from $13.25 per hundredweight in 1996 to $9.25 in 1999.

With the drought dragging on, Northern Colorado Water Conservancy District announced plans in May 2000 to build a new dam in or near Poudre Canyon and a new reservoir east of Ault.

“We’re looking at this trying to address regional water needs,´ said Brian Werner, district spokesman. “We’re going to need additional storage at some point.”

The proposed project was estimated to cost about $200 million. But opponents of the idea quickly surfaced and called it unnecessary and bad for the river.

“The Poudre River as it flows through Fort Collins would become a mere trickle,´ said David Lauer, then president of Friends of the Poudre. “It would basically ruin the river as far as (wildlife) habitat.”

The battle over the district’s proposed Glade Reservoir at the mouth of Poudre Canyon rages on 10 years later and the price tag for the project has since jumped to more than $400 million.

Beets less sweet

In August 2000, area sugar beet growers were trying to decide if they should buy Western Sugar Co., which was being offered for sale by parent Tate & Lyle PLC. An oversupply of cane sugar nationally was causing some growers to plow under their beets to shore up prices. The growers closed the deal in 2002, forming the Western Sugar Cooperative.

As the fall 2000 harvest season approached, economist Green noted that the total value of crop production in Northern Colorado had been going down for the last four years, with a loss totaling more than $100 million to the region’s economy over that period. Green predicted that trend was likely to continue in the years ahead.

No one predicted the dire straits that agribusiness – especially the dairy industry – would be in at the end of the decade, squeezed between the implosion of the credit markets and some of the lowest commodity prices in years. But the 2007 USDA Census of Agriculture showed a 15 percent increase in Weld County acreage devoted to farming over 2002, with value of production up 36 percent. And at the end of April 2010, the National Integrated Drought Information System reported Northern Colorado’s Crop Moisture Index as “abnormally moist.”

As Will Rogers said, “The farmer has to be an optimist…”