Cost to Grow Georgia Crops Most in History

Row-crop harvest is winding down in Georgia. Farmers don’t know yet exactly how much corn, cotton, peanuts and soybean they’ve grown. But one thing is almost certain: This year’s row crops were the most expensive in history to produce.

“Georgia farmers, like many, have enjoyed good yields and prices for a few years now. But they’ve had to deal with rising costs, too,” said Don Shurley, an economist with University of Georgia Cooperative Extension. “The bigger problem is (crop) prices are falling now.”

Last year, Georgia farmers spent $478, on average, to grow an acre of cotton on irrigated land, Shurley said. This year, they spent an estimated $573 per acre, the most ever, according to UGA College of Agricultural and Environmental Sciences data.

The per-acre figure includes a farmer’s variable costs, which are things like fuel, seed, fertilizers, chemicals, labor, monitoring, harvesting and utilities. It doesn’t include what are called fixed costs, or things like equipment depreciation and payments, insurance or land rent that can also be associated with growing crops. It doesn’t include the salary the farmer pays himself, either.

In 2007, Georgia cotton farmers picked an average of 801 pounds of cotton per acre. After subtracting the variable costs, they made $63 per acre. In 2008, they averaged 843 pounds per acre. After subtracting their variable costs this year, they made only $19 per acre.

“These are all average numbers. Some farmers did better. Some did worse,” Shurley said. “But this just goes to show that even with good yields it hasn’t been enough to keep up with cost.”

The situation is the same for corn, peanuts and soybean, said Nathan Smith, a UGA Extension economist.

An acre of irrigated peanuts cost a farmer $529 in 2007. It cost $685 this year, a 30 percent increase. An acre of irrigated soybean cost $225 in 2007. It cost $314 this year, a 40 percent increase. An acre of irrigated corn this year cost $648, almost 50 percent more than last year. All are record-setting numbers, he said.

The rising prices are cutting farmers’ returns on their investments.

The average return on an acre of peanuts last year, after subtracting the variable costs, was $233. It will be $178 this year. The average return on an acre of soybean last year was $105 after variable costs. It will be $24 this year. The average return on an acre of corn last year was $148. It will be $98 this year. Again, these numbers don’t include costs for equipment depreciation or payments, insurance, land rent or the farmer’s salary.

“What these numbers do show is that farming has always been volatile in that the farmer has little control over input prices or the prices he receives,” Smith said. “That volatility is even more so now.”

The prices for fuel and fertilizer have stabilized, or decreased, in recent weeks, Shurley said. “But to me, ‘09 will be tighter than ‘08. Farmers will have some tough decisions to make for next year’s crops.”

By Brad Haire
University of Georgia

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Illegal Immigration Costs Georgia $1.6 Billion Annually, Finds New Report by FAIR

PRNewswire-USNewswire/ -- A new report by the Federation for American Immigration Reform (FAIR) demonstrates why Georgia has taken a lead in adopting state-based policies to control the costs of illegal immigration. According to the new study, The Costs of Illegal Immigration to Georgians, the state currently spends about $1.6 billion a year to provide three basic services to illegal aliens and their dependents -- K-12 education, public health care, and incarceration of criminals. These costs associated with the estimated 495,000 illegal aliens residing in the state amount to a $523 a year burden for every Georgia household headed by a native-born American.

K-12 education for the children of illegal aliens constitutes the largest share of the Georgia's cost burden, finds the report. The annual price tag for schooling an estimated 64,100 children who are themselves illegal aliens, and an estimated 89,700 U.S.-born children of illegal aliens, runs to about $1.38 billion. Unreimbursed health care costs add an additional $210 million to the taxpayers' tab, while another $22.6 million is spent incarcerating illegal aliens who have committed other crimes in Georgia. All of these costs compound an already difficult fiscal situation, as state officials estimate a current budget shortfall of about $2 billion.

"At a time when governments at every level are struggling with huge deficits, slashing vital programs and services, and US-workers are losing their jobs, we see repeated examples of how illegal immigration is adding to already significant fiscal worries," said Dan Stein, president of FAIR. "As Georgia businesses have padded their profit margins in recent years by using illegal aliens to undercut American workers, the true costs for this low wage labor force have been passed along to the taxpayers."

In response to the spiraling costs associated with illegal immigration, Georgia adopted workable state-based enforcement policies in 2007, which have begun to have a positive impact. "Georgia provides a case study in how a state can respond effectively to crushing cost burdens associated with illegal immigration, and provides a model for other state governments," said Stein.

The Costs of Illegal Immigration to Georgians is the latest in a series of studies FAIR has produced examining the impact of illegal immigration on state governments and local taxpayers. "Until fairly recently, regions like the South had been largely unaffected by the phenomenon of mass illegal immigration. The findings of this report, that illegal immigration now costs Georgia $1.6 billion a year, is evidence that mass illegal immigration is truly a national problem that demands real enforcement solutions at the federal, state and local level," concluded Stein.

The Costs of Illegal Immigration to Georgians is available on FAIR's website, www.fairus.org.

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Duke: Treasury Action Should Work, But at High Cost to Taxpayers, Professor Says

The Treasury’s proposed action to use government money to purchase mortgage-backed securities held by financial institutions should work, but at an unnecessary cost to taxpayers, says Steven Schwarcz, the Stanley A. Star Professor of Law & Business at Duke University.

Schwarcz has studied systemic risk for more than a year and has suggested, in congressional testimony last October, that the government should consider acting as a market liquidity provider of last resort, but to do so at the outset of a financial market panic. His article, “Systemic Risk,” will be published next month in the Georgetown Law Journal.

“The focus from the outset should have been on treating loss of confidence in the financial markets, which is the underlying cause of problems in the financial system,” Schwarcz says. “While it may have been necessary under the circumstances for the Fed to act to prop up AIG and Bear Stearns, among others, preventing financial institution failure amounts to treating symptoms of the disease, not its underlying cause. By delaying, the government missed a vital opportunity to nip the problem in the bud at a much lower cost to the American taxpayer.”

The Treasury’s proposed bailout plan is a semi-strong version of Schwarcz’s proposal, which he said would work most effectively if used at the outset of a market panic. The current panic has become so entrenched, however, that financial institutions now distrust the creditworthiness of other financial institutions; they do not know how much in mortgage-backed securities those institutions hold or the value of those securities.

The Treasury, therefore, needs to address both this counterparty risk perception and the market collapse. It is proposing that government money be used to purchase, at a deep discount, mortgage-backed securities held by financial institutions, which would stabilize market prices and reduce counterparty risk.

'This should work," says Schwarcz, "but it will be much more expensive than if the government had stabilized the market at an earlier point."

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