Outlook 2007: Agriculture

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2005 YTD pages: 10,155.4

2004 YTD pages: 9,808.8

% change: +3.53%

Bright spots: Increased demand in the U.S. seems to be keeping up with increased supply, especially in the crop and dairy markets. There's also good potential for increased global demand as foreign markets, particularly China, export less and import more.

Challenges: Rising energy costs will put pressure on farmers and likely dampen profits because of decreased demand for capital equipment. Uncertainty in the poultry and beef markets due to the threat of disease-and ensuing news coverage-remains a potential problem for 2006.

A slowdown in agriculture media spending, after two consecutive good years, seems unavoidable in 2006. Rising energy costs and overall increases in supplies of crops, cattle and dairy will likely contribute to a fairly flat sector.

"It's very expensive to run quarter-million-dollar machines up and down the field," said Andy Weber, CEO of Farm Journal Media. "It's not going to be a terrible year, but profits will be lower. We're already seeing some effect in machine advertising, [as farmers] hold off a bit on buying."

The effects of increased supplies of crops and livestock, the result of farmers bulking up over the past few years to meet increased U.S. and global demand, are likely to be felt this year as well. The USDA was projecting a 4% boost in milk production by the end of 2005; however, the increase in demand so far has managed to keep price declines small, Weber said.

Beef producers are looking to reopened export markets in Japan and South Korea for potential growth. However, global animal disease issues remain a wild card, as outbreaks of avian flu and mad cow disease can quickly stoke consumer fear and drastically slow demand.

While the spike in energy prices caused by Hurricane Katrina means increased costs for the industry, the physical damage of the storm had a minimal impact on the overall U.S. agriculture market.

"Agriculture also depends a lot on the strength of the dollar," Weber said, adding that other international factors such as other countries' crop success or failure, and fluctuations in exports can sway the agriculture market-and its media spending-from month to month. -Beth Snyder Bulik

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