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The Associated Press September 17, 2010, 9:22AM ET

Oregon farm income drops 41 percent in 2009

Farm income took a nosedive in Oregon last year, following a downward trend that began in 2004.

Net income for farmers and ranchers fell 41 percent in 2009, a decline that a state agricultural analyst called "pretty staggering."

Brent Searle of the Oregon Department of Agriculture said newly released figures showed Oregon net farm income at just under $563 million last year after hitting a record high of $1.3 billion in 2004.

The number is based on U.S. Department of Agriculture figures and is considered an important indicator of the overall health of the agricultural economy in any state.

Searle said the agricultural economy follows cyclical patterns, so "a downturn isn't anything new, but the magnitude of last year's net farm income drop is significant."

Ken Holliday, a longtime rancher in Grant County in eastern Oregon, said Thursday that he was not surprised by the decline.

"As far as the economy goes for agriculture, it's in the toilet," Holliday said. "Nobody's making any money. It's just pitiful."

Searle said operating expenses played very little role in the plunge, which was due mostly to a loss of production value.

"Last year was the first time in many years that the value of production decreased, and it dropped way down in both crops and livestock," Searle said.

The value of Oregon crop production in 2009 fell to just over $3 billion, a decrease of about 13 percent, while the value of Oregon livestock production was $923 million, a decrease of about 12 percent.

Searle said the decline was spread across many different sectors, including dairy and grass seed. The Willamette Valley in western Oregon is one of the largest producers of grass seed in the world.

"In 2009, every gallon of milk they sold was under cost," Searle said of dairy farmers, while grass seed growers suffered from falling demand caused by the housing slump and reduced sales to golf courses.

Wineries, once a strong growth industry in Oregon, also felt the recession last year, said Patty Skinkis, an Oregon State University professor who specializes in viniculture.

"2009 really was the start of increased concerns over reducing the cost of production, both in the vineyard and the winery," Skinkis said.

She noted that, despite the economy, "in terms of fruit quality, it was an excellent year," so vintners were optimistic about some improvement in 2010.

Holliday said business has gotten slightly better for some ranchers this year with improved cattle prices, stronger exports and a premium for natural beef.

"Cattle prices are better than most of the economy," Holliday said. "Not enough to make us whole, but just enough to keep us in the game and pay off our debt. It's sure not as grim as other people are facing."

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