CORVALLIS - The 1998 outlook for producers of the Pacific Northwest's broad variety of agricultural commodities is a market basket of mixed reviews.

Looking forward to a good year are the region's hazelnut, grass seed, wine grape, potato and apple producers. Price expectations are less bright for dairy, wheat and berry producers.

That is the general forecast from economists who contributed to the "1998 Pacific Northwest Agricultural Situation and Outlook," an annual report jointly published by the three regional Land Grant universities, Oregon State University, Washington State University and the University of Idaho.

The report gives an overview of the performance of the U.S. and Pacific Northwest economies, and the economic prospects for Pacific Northwest agricultural commodities. The report includes a series of articles written by agricultural economists from the three universities.

On the national economic front, the United States enjoyed an exceptional year in 1997 with strong economic growth, low inflation and low unemployment. John Mitchell, U.S. Bancorp, Portland, pointed out that December 1997 was the 81st month of a period of sustained U.S. economic growth that began in March 1991.

This growth cycle, now the third longest in U.S. history, is showing few signs of weakening, but the economy is expected to slow somewhat in 1998 due to the turmoil in Asian economies and a squeeze in profits.

Pacific Northwest agricultural exports may suffer from the strengthening U.S. dollar compared to Asian currencies. On the national level, while the dollar value of U.S. agricultural exports has increased over the past two decades, the U.S. market share of world agricultural exports has fallen steadily.

Economists believe placing more emphasis on value-added agricultural products for export may reverse this situation.

Special features in the 1998 Agricultural Outlook report include articles on the deregulation of the U.S. electric power industry and the increasing adoption of precision farming technology by the nation's agricultural producers.

Precision farming is bringing information about production agriculture to farmers through technology. This information - gathered and analyzed through the use of computers, global positioning system receivers and geographic information systems software. - allows farmers to make better decisions.

Farmers wanting to use precision farming should, however, "tread carefully," the report warns. Technology is changing rapidly, and hardware and software may be obsolete a few years after purchase.

The Pacific Northwest Agricultural Outlook offers these forecasts for the region's major commodities: Wheat and feed grains:

Lower price expectations are forecast for Pacific Northwest wheat producers due to an all-time high level of world wheat production. Global production of wheat is projected to exceed 600 million metric tons for the first time in history. High ending stocks of white wheat coupled with somewhat lower domestic use will keep white wheat prices flat in the new year. Economists predict feed grain prices will tend to be lower due to increased export competition for all feed grains and increased U.S. production of corn.


If nationwide dairy production holds steady in the coming year, as economists expect, milk prices should increase moderately. Butter and cheese prices are expected to decline early in 1998, due to high production levels exceeding domestic consumption rates.

Processed vegetables:

The price outlook for processed vegetables in the 1997-98 marketing year is mixed due to a combination of factors. Weakening demand for canned corn products and stronger-than-expected production has made wholesale prices for most canned corn products flat to somewhat lower than last year. Relatively strong demand coupled with near-record supply levels resulted in overall good movement of frozen vegetable products.

Tree fruits:

The price picture for northwest tree fruits is mixed. Northwest and overall U.S. apple production is down significantly from 1997 levels, which will strengthen fresh market prices considerably. Conversely, the northwest's winter pear crop reached a record high 440,000 tons, which will bring some downward pressure on prices, but overall crop quality should keep prices fairly steady. Northwest sweet cherry production is increasing, as new orchards have been established over the past several years. Growers are concerned about higher average production levels and their impact on prices.

Meat animals:

Beef production in 1998 is expected to be down 5 percent from last year's levels. This will push beef prices up. Beef exports should show a six to 10 percent improvement in the new year, but higher beef prices and unfavorable exchange rates could limit export growth. Pork supplies should remain high through 1998, causing prices to decline. Lamb production, on the other hand, is forecast to drop 6 percent in 1998. That will strengthen feeder lamb prices in the first and second quarters of 1998, but even so, economists predict prices on slaughter lambs will remain near 1997 levels.

Grass seed:

The grass seed industry enjoyed a good year in 1997 and can look for more of the same in 1998. Increasing acreage and strong yield accounted for a healthy grass seed harvest in 1997, but continued U.S. economic growth has sustained strong demand for grass seed products, particularly in the home building and golf industries. Grass seed exports, driven by strong sales of tall fescue and Kentucky bluegrass, have kept pace with domestic demand. Economists look for these trends to continue into the new year.


High wine grape production in Oregon and Washington (Idaho experienced an average year) in 1997 is expected to have little, if any, negative effect on prices as consumer demand for wines has remained strong and sales of wines continue to increase. Washington harvested a near-record crop of Concord grapes in 1997, but prices should remain strong due to low inventories from the previous year.

Hay and forages:

Northwest hay production increased in 1997 but prices are expected to remain strong in 1998 due to increasing exports and steady demand from dairy producers and horse owners. Prices may eventually weaken if hay acreage increases in the region. Also, milk prices and the long-term outlook for grazing animals on federal and state lands will affect hay prices.


Northwest potato growers harvested record yields, but a smaller crop overall for the 1997-98 marketing season due to reduced acreage. As a result, potato prices should receive a boost early in the new year. Another bright spot in the Northwest potato price picture is strong regional demand for potato flakes, which are used to make increasingly popular potato snack foods. Less bright is the demand outlook for frozen processed potatoes. Increased competition from Canada is likely to dampen export potential for these products.

Small fruits and nuts:

The price picture for blackberries, blueberries, cranberries, raspberries and strawberries is mixed at best. Blackberry, raspberry and strawberry production were up in 1997, which will force prices downward in 1998. Good blueberry and cranberry production coupled with high carryover stocks of both commodities will weigh prices down in the new year. Hazelnut growers produced a record crop in 1997 and are looking forward to increased exports in 1998 due to new markets for hazelnuts opening in China. Prices will depend on Turkish and Italian production. Fish and seafood:

The salmon forecast for 1998 is bleak. In 1997 additional runs of coho salmon were listed under the Endangered Species Act. Implementation of the new Federal Fisheries Act may further decrease fishing opportunities. Prices will remain at historically low levels due to large supplies of aquaculture salmon. Pacific pink shrimp prices should increase in 1998 while shrimp landings decrease as the 1997-98 El Nino strengthens and has an impact on ocean productivity. Groundfish landings were down slightly in 1997. Prices increased somewhat and are expected to remain steady. Harvest levels for Dungeness crab were low in 1997, but prices are expected to decrease in 1998 due to a buildup of crab inventories and increased competition from Alaskan crab. Albacore landings will increase in 1998 while prices remain steady.

Timber and forest products:

The outlook for forest products is uncertain. Housing starts are expected to fall off somewhat after a strong year in 1997. This reduction, coupled with weak Pacific Rim markets, makes significant gains in lumber and plywood prices unlikely. Secondary wood products, faced with increasing off-shore competition and reduced raw material availability, may lose ground in 1998.

A limited supply of copies of the "1998 Pacific Northwest Agricultural Situation and Outlook" are available by mail at no charge for the first six copies. Add 25 cents for each additional copy beyond six. Send your request and check or money order payable to OSU to: Publication Orders, Extension and Station Communications, OSU, 422 Kerr Administration, Corvallis, OR, 97331-2119.

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Larry Burt, 541-737-1436