Dec. 20, 2005

COLLEGE STATION – Though many producers struggled with the effects of extreme weather, the state's agriculture industry persevered and made the best of 2005, said a Texas Cooperative Extension expert.

Jose Pena, Extension economist in Uvalde, said early rainfall made vegetable and crop production especially successful this year despite later drought.

"Early, above-average spring rain and low relative humidity helped produce near-record yields of most spring vegetables and some row crops," Pena said. "For example, cotton production in Southwest Texas experienced record yields under heavy irrigation."

The most significant struggle for many producers was lack of soil moisture, he said, including "a severe dry spell from April to December, with rainfall as low as 75 percent of the long-term average in a large portion of the state. As a result, crop agriculture experienced increased irrigation requirements."

Thanks to record-high energy prices, necessary irrigation also became more expensive for many producers, Pena said.

Because of the state's severe and extreme drought conditions since July Texas — along with Illinois — was one of the country's driest regions in 2005, according to the National Drought Mitigation Center.

Dr. David Anderson, Extension livestock economist in College Station, said dry conditions were a challenge for many cattle producers in the eastern half of the state.

"Significant drought had a large impact on the hay crop and hit pastures hard," he said. "Many producers had to begin buying hay much earlier than normal, and the hay that is available is often poor in quality.

"Of course, hurricanes impacted some producers in Southeast Texas; high fuel costs hit them hard and will continue to do so in the coming year."

However, high cattle and calf prices were helpful, Anderson said.

"Prices have been record high over the last couple of years," he said. "It's a mixed bag for cow-calf producers. While prices have been good, drought and increasing fuel costs have increased dramatically."

Pena said gross agricultural income increased significantly because the markets were good for livestock. Increased production costs, however, will likely mean that net income will nearly match or be slightly lower than in 2004.

Anderson said even though livestock production was not as successful as last year, it was certainly more productive than it was five years ago.

"In the coming year, I expect to see calf prices decline as cattle inventory expansion occurs in the U.S.," he said. "But prices should still be at relatively good levels. The opening of the Japanese market for beef is positive, even though it may take a long time to regain significant market levels."

The U.S. Department of Agriculture announced on Dec.11 that the U.S. will resume exporting beef to Japan. Trade was severed in 2003 when a Japanese embargo prevented U.S. beef from being sent to Japan after the state of Washington reported a case of bovine spongiform encephalopathy (commonly referred to as BSE, or "mad cow" disease).

The cattle market has gradually improved since 2003, Pena said, and the future should be good for producers.

"The cattle market outlook for 2006 remains bright," he said. "The favorable market may extend into 2007 as Japan allows U.S. imports again."

The future looks good for crop producers as well, Pena said.

"The cold weather during December 2005 will help conserve the sparse moisture left in the soil profile," he said. "It will also reduce the potential of insect and disease problems in the coming spring."