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Economic Forecast: Agriculture likely to be mixed bag for Georgia producers

This is the third in a three-part series examining the economic forecast for 2012.

FILE - In this Nov. 2, 2001 file photo, a machine shakes pecans from a tree near Albany, Ga. Pecan prices have soared to record highs, driven by withering drought in the U.S. and surging demand in Asia. Farmers and sheriffs in Georgia, the nation's top pecan producer, say criminals have learned swiping unharvested nuts, worth $1.50 or more per pound, can be as profitable as scooping up piles of loose change. (AP Photo/Elliott Minor, File)

FILE - In this Nov. 2, 2001 file photo, a machine shakes pecans from a tree near Albany, Ga. Pecan prices have soared to record highs, driven by withering drought in the U.S. and surging demand in Asia. Farmers and sheriffs in Georgia, the nation's top pecan producer, say criminals have learned swiping unharvested nuts, worth $1.50 or more per pound, can be as profitable as scooping up piles of loose change. (AP Photo/Elliott Minor, File)

— With La Nina firmly entrenched for North America, drought conditions are likely to provide a headache for farmers without irrigation, a noted agriculture researcher predicted this week.

Mark Masters, an Albany State University professor and associate with the Flint River Water Planning and Policy Center, says that 2012 will likely prove to be a mixed bag for the state's biggest economic engine: agriculture.

While producers enjoyed high prices on corn and cotton in 2011, those prices have begun to drop. Masters predicts that prices will still allow farmers to enjoy a comfortable income in 2012, but those with access to water will remain the beneficiaries of the higher-than-typical prices.

"If I had to sum up 2012 , it would all come down to the two P's -- prices and pivots," Masters told area stake holders at the 2012 state Economic Forecast symposium this week in Albany. "If you have the latter, you can take advantage of the former."

The water issue will remain a hot topic, Masters said.

"At no point has water been more on the lips of producers than this year," Masters said. "With La Nina here and a persistant drought, producers will live and die by water...but use of the water has its consequences."

Masters said that surface water levels in the Flint River and its tributary creeks is already flowing at lower-than-typical levels and, as farmers are forced to irrigate thanks to very little rain, ground and surface water levels will continue to drop.

But Georgia isn't the only state being impacted by drought conditions. In some ways, the drought is helping Georgia's cattle market, he said.

Texas and Oklahoma, two states that are routinely some of the nation's largest cattle and beef producers, are, in many ways, in an even worse drought situation than states further east.

This is causing herd totals in those states to dwindle; driving up the cost of cattle on the national market.

Masters predicts that farm incomes will remain relatively good, but several issues, from water availability to government regulatory controls could impact farmers' bottom lines.

Masters said that government regulation at the state level cost vegetable growers more than $140 million last year alone thanks to Georgia's new stringent immigration reforms.

The 2012 growing season will also be the last growing year before introduction of a new farm bill, which always presents the possibility of having far-reaching impacts on both the markets and the producers.

The changes to the estate tax are also a concern, Masters said, as an exemption that allowed farmers to pass down large tracts of land without being heavily taxed ends, meaning that only up to $1 million can be passed down with anything over being taxed at 55 percent.

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