- Special Sections
- Berne Shopping News
Purdue University professor Chris Hurt delivered an analysis of current national economic thinking, along with Purdue's annual agricultural predictions, in Monday's Ag Outlook event at the 4-H Fairgrounds in Monroe, sponsored by the Purdue extension office in Adams County.
Speaking before some 80 people, Dr. Hurt said the United States has been facing inflation since the 1960s and 1970s, began strongly battling inflation in the 1980s, and now the Federal Reserve is trying to create some inflation because the economy, harmed by the sagging housing market, could tip into deflation, which would undercut normal consumption and cause long-term problems.
He noted that consumer purchases and consumer services account for more than 70 percent of the nation's overall annual economic activity.
He also predicted that, nationally, farmers could see a boost to their incomes in 2011 because of higher prices from a lower-value U.S. dollar and greater international demand, such as sales to China, which buys more than 60 percent of the U.S. crop and has begun buying more corn. Hurt called China "the magic word in the market."
Hurt said the Federal Reserve's plan to "print more money" and buy up national debt will strengthen and raise commodity prices and keep interest rates low as the government "reinflates."
Twenty-eight percent of the country's industrial plants and production equipment is idle and unemployment and unused real estate remain significant problems, Hurt said, adding: "Everybody is surprised." at the slowness of the recovery from the recession, which technically ended in the summer of 2009.
While the average acre of land in Indiana is valued at $5,000, Hurt reported, "the alternate investments for farmland are bleak right now."
Although "not bullish" on continued growth of ethanol, he made the point that, since 2005 in the U.S., 100 percent of the growth in corn use has been due to production of ethanol and, since 2005 in the world, 85 percent of the growth of corn use has been due to ethanol.
The federal government has had what are called a "blenders' tax credit" for ethanol makers, but that will end on January 1 and some in Congress do not want to extend it. Hurt said he does not think Congress will end the tax credit, but it may reduce the amount.
Here are Purdue's agricultural estimates for 2011:
• In Indiana, corn revenues could drop to about $5.15 per bushel from today's roughly $5.45 and production costs could rise from $4 per bushel now to around $4.40.
• Soybean revenues in Indiana may decline from about $11.80 a bushel to $11 and production costs may climb from around $9.75 a bushel now to near $10.40.
• Wheat sales will improve because the U.S. crop is up more than two percent, while the wheat crops in the rest of the world are down 5.6 percent, including 26 percent down in Russia and 15 percent down in Canada.
• A growth in swine profits in the spring and summer of 2011 is seen.
• Beef cattle will see a rise in value from $98.50 per 100 pounds for live animals to $103.
• Dairy cattle will have an increase in value from $16.35 per 100 pounds of milk to almost $17.
• Land values should be up 10 to 15 percent by the spring of next year.