By major indicators, Georgia’s economy appears to be in good shape, according to Georgia State Economist Jeff Dorfman. Unemployment is historically low, and, especially encouraging for rural Georgia, 70% of new manufacturing plants opening in the near future are outside metro Atlanta.
Dorfman, the featured speaker at the opening session of the 2020 Georgia Ag Forecast Series, tempered that good news with these caveats: It’s tough to improve on the highest-ever employment; Georgia’s economy, particularly its ag economy, is heavily dependent on trade; and farmers continue to struggle with recovery from Hurricane Michael 15 months later while waiting on the arrival of disaster assistance funding.
Each of these three factors brings significant uncertainty. Trade, for instance, is affected by the economies of other countries. Several of the U.S.’ top trading partners are in recession.
“We do a lot of international trade business,” Dorfman said. “If the rest of the world is doing badly, that tends to slow the Georgia economy down more than it does most other states.”
The Ag Forecast Series included presentations from UGA economists about the economic conditions affecting Georgia’s major commodities. For cotton, decreasing demand is expected in part because of uncertainties related to trade negotiations and a slowing global economy. UGA Economist Adam Rabinowitz said optimistic price expectations could fall in the 67-75 cents per pound range, while pessimistic expectations could range from 62 to 65 cents per pound.
Peanut demand has remained flat for the past four years. Rabinowitz said production would have to decrease for prices to increase. Farm gate prices are expected to hover near $400 per ton in 2020.
Corn prices are expected to increase and resolution of trade disputes could produce opportunities for corn, soybean and wheat growers. Rabinowitz said Georgia corn growers could expect prices between $4.48 and $4.52 per bushel.
Rabinowitz cautioned that expected soybean prices of $8.83 per bushel are dependent on resolution of the China trade dispute and increased competition from Brazil. Wheat prices are expected to hover around $4.82 per bushel.
The beef sector’s cycle between liquidation and expansion seems to be nearing the end of expansion but factors are in play that may extend the expansion phase of U.S. beef.
Rabinowitz said the outbreak of Asian swine flu has hit China’s pork industry hard, and Chinese consumers are turning to beef. While the extent of losses in Australia’s beef and dairy sectors due to the historic bush fires is unknown, it could be significant. Australia, through the Trans-Pacific Partnership, is a major supplier of beef to China.