SALEM, Ore. — Oregon’s agricultural economy has had a healthy run but will likely return to more moderate profitability, said Valentin Celaya, senior vice president of AgWest Farm Credit.

“We have more commodities that are breakeven, slightly profitable or not profitable than a few years ago,” Celaya said, during the annual SEDCOR Ag Breakfast Feb. 21.

Farmers in struggling fields have limited alternatives because other commodities may be middling.

Celaya outlined the 2025 outlook for major Oregon ag commodities for the crowd at the Chemeketa Community College Agricultural Hub in Salem, Ore. — and stressed there’s variation within segments.

• Cattle will be very profitable on average with high prices and a herd that isn’t growing due to weather and fires.

• Nurseries and hazelnuts also will be profitable.

• Blueberries will be slightly profitable.

• Timber had some very good years but is softer now and will be slightly profitable.

• Wine will be breakeven, as demand for alcohol declines with changing consumer preferences.

• Hay also is breakeven, with cattle and dairy industries not expanding and export markets weak.

• Grass seed is a challenge and farms will be below profitable on average.

Steps to success

Celaya said farms and ranches could take a few steps to have a better chance of success.

Ag producers must create demand for their products and also should invest in workers to become more profitable through operational excellence.

Continued investments in the business should be tempered with financial management.

Political developments

Politics matter to agriculture and developments regarding tariffs and labor are happening so fast it’s hard to keep track, Celaya said.

New opportunities will emerge from the churn, but so will new challenges.

Celaya noted that the U.S. is a net ag importer today and the country’s supply chains are intertwined with foreign nations.

“We’re trying to serve a world market. We’re trying to consume from a world market,” Celaya said.

Economy remains strong

Though Oregon’s water situation looks good for 2025, input and labor costs remain high.

Ag land values continue to increase but the Willamette Valley’s number of sales are down. Properties with soil or water problems aren’t in demand like they used to be, Celaya said.

“You can’t afford to buy an asset that’s not productive to you,” he added.

In general, the economy remains strong with low unemployment and inflation improving to 3% in January.

Interest rates

Interest rates feel high compared to the past few years, but over 30 years, they’re relatively normal.

Celaya said the Federal Reserve has indicated that it wants interest rates to come down, but that isn’t anticipated to occur in the summer. There aren’t prominent signals rates will increase.

“I would not be budgeting for rates to go down. I would go ahead and budget where we’re at,” Celaya said.

SEDCOR, the Strategic Economic Development Corporation, is based in Salem. The regional economic development organization is focused on Marion, Polk and Yamhill counties in the mid-Willamette Valley.