The Asian financial flu that swept world markets in 1998 carried particularly nasty side effects for the Pacific Northwest economy, says University of Idaho agricultural economist Neil Meyer.

The prognosis for the region's economic interests in 1999 will depend on how rapidly key Asian economies recover from their recent turmoil, Meyer said.

The Northwest suffered most among U.S. regional economies because of its reliance on trade with Asia. Although the region accounted for 8 percent of all U.S. exports, it shipped 14.7 percent of the nation's exports to Asia.

U.S. exports to Asia, valued at $161.9 billion in 1998 are expected to fall 15.7 percent from 1997, Meyer said. Regionally, the drop is predicted at 14 percent to a total of $23.8 billion.

Employment and income are the two watchwords Meyer said will signal economic changes in advance.

"The U.S. is still our major and most important market. Second --watch what is happening in Japan, the next strongest economy," Meyer said.

"Income and employment growth there will strengthen Japanese demand and that of countries exporting to Japan. More income to all countries will revive U.S. export demand." Economists estimate that the economic problems will level out in 1999, Meyer said.

The speed with which the affected Asian countries resolve internal policy issues will determine both the pace and strength of recovery, Meyer said.

Firm predictions will be difficult to make until the countries begin those steps. Meyer said, "We will have to wait and see."

Meyer's analysis of the Asian financial problems is part of the 1999 Pacific Northwest Agricultural Situation and Outlook Report prepared by economists at the University of Idaho, Washington State University and Oregon State University.

The 11-part series was released Dec. 30 and is available on the Internet at http://coopext.cahe.wsu.edu/~news/outlook99.html.

In his report, Meyer traced the reasons for the widespread economic effects that grew from Asia's economic troubles.

During the last 30 years, Asian economies grew rapidly, fueled on exports, advancing skills, better technology and manufacturing advances, Meyer said.

Japan led the growth wave, followed by Korea, Taiwan, Thailand, Hong Kong, Singapore and the Philippines. China and Vietnam most recently joined the economic surge.

The changes meant more income and demand for new goods and services, making Asia the driving force in the growth of world consumption, Meyer said.

The collapse of Thailand's currency, the baht, in the summer of 1997 provided the first evidence of the meltdown to come. "This was a surprise to many because the economies had been experiencing rapid income and job growth," Meyer said.

Economists blame Asian financial systems for much of the problem. The institutions ignored effective risk management because their governments made implicit or explicit guarantees against failure, Meyer said.

Since financiers no longer faced the full costs of failure, inflation and speculation followed. "The net result was an increase in the vulnerability of the financial system," he added.

The Asian economies rapid growth disguised the extent of the risky lending that shielded financial firms losing money from the damage caused by their decisions, Meyer wrote.

American investors saw similar scenarios in the late 1970s and early 1980s with the agricultural and Savings and Loan crises.

With the Asian economies, new information and transactions technologies tied them more closely to world markets with near-instantaneous links. That increased the Asian economies' vulnerability to changes in market sentiment and capital flight, Meyer said.

Reforms that strengthen the nations' financial systems and build International Monetary Fund support will be needed to solve the problems.

Japan's move to pass a financial reform package, the U.S. budget bill that provided $18 billion to the IMF and the overall IMF package totaling $70 billion will help stimulate that nation's economy, Meyer said.

Reviving the Japanese economy, the largest in Asia, will expand markets for both U.S. goods and those from neighboring Asian countries.

That would go a long way toward helping the Northwest economy, Meyer said. Japan is the region's largest single export market although Korea, Taiwan, Thailand and Singapore collectively account for a slightly larger share.

"Reduced demand for our products resulted in the export slowdown," Meyer said. For food exports, the slowdown resulted in record low prices because their demand is inelastic. That means no matter how cheap food is, people only demand a certain amount. More supply causes prices to decline drastically.

Despite hopes for better conditions in 1999 based on financial reforms in Asia, Meyer said, perils remain. A slowdown in China's economy poses another major risk, because it could lead to that nation to devalue its currency, the renmimbi, by 20 percent, according to some estimates.

"If that happens, another round of 'Asian Flu' will likely follow," Meyer added.

U.S. Federal Reserve efforts to keep the domestic economy moving appear to be working, Meyer said. several other threats remain to a speedy recovery. One is the slowness of reforms in some Asian economies.

Another threat is global. "Unless demand increases or world supplies, particularly of agricultural products, decrease the United States will continue with low commodity prices in 1999," Meyer said.

Another threat is homegrown. Internal U.S. pressures could revive policies that limited farmers' flexibility to respond to world markets.

Meyer said efforts to protect water and air quality, food safety protection and international policy decisions also affect U.S. and Northwest farmers and their competitiveness in world markets.

Forest owners can look at the splintered outlook for lumber and wood products as a chance to regroup and look to the future, says University of Idaho forest economist Charley McKetta.

With the exception of cedar, forest owners thinking about selling logs to beat sliding prices are too late, McKetta said.

"Perhaps it's time for tree farmers to build up inventories while targeting long-run markets for larger, higher quality trees. Delay harvests of larger trees until average wood price levels rise with the next business cycle," McKetta said.

McKetta's analysis of forest products is part of the 1999 Pacific Northwest Agricultural Situation and Outlook Report prepared by economists at the University of Idaho, Washington State University and Oregon State University.

The 11-report series was released Dec. 30 and is available on the Internet at http://coopext.cahe.wsu.edu/~news/outlook99.html.

Three main oddities confound the present situation for forest products, McKetta said.

The first is low 30-year mortgage rates, which hit 6.71 percent in October, largely fueled a housing boom since 1995. Total construction starts peaked at a seasonally adjusted annual rate of 1.7 million in July. Starts of single family homes hit 1.25 million. The first economic peculiarity for forest products, McKetta said, is although interest rates remain low, a slowing economy and saturated housing markets will snuff the boom.

Data Resources Inc. predicts single family starts will drop 5.6 percent in 1999 with little recovery until 2002. "New building permit data suggest that housing declines may be greatest in some western markets," McKetta added.

The second oddity is that more housing construction did not boost lumber prices. The Random Lengths lumber index dropped from $457 per thousand board feet in April 1997 to $332 per thousand in October 1998.

"A causal factor was the ailing Asian markets that gutted North American wood exports," McKetta said. "A quarter of both U.S. and Canadian export lumber was redirected back into the U.S."

The third irregularity is that falling western lumber prices did not curb production.

Log markets are settling, McKetta said. The supply crisis brought on by federal harvest reductions from 1988 to 95 abated in most areas. Enough mills closed by 1997 to soften competition and the rate of mill closings dropped except for a recent surge east of the Cascades. Federal harvest declines beginning in southern Idaho threaten many small scattered mills there, he said.

Other situations were more predictable, McKetta said. Domestic sawlog prices dropped as lumber prices fell. Coastal Douglas fir No. 2 sawlogs fell to $560 per thousand board feet in Washington and $545 in Oregon from a 1993 high of $840. Intermountain Douglas fir and larch stayed relatively stable at $420 per thousand in northern Idaho and $475 per thousand to the south.

Western red cedar emerged as the success story. Coastal prices rose 27 percent in 1997 with some sales bringing $920 per thousand and one pole-grade sale $1,500.

Although Washington prices dipped 10 percent in 1998, Oregon prices remained high. Intermountain cedar prices soared 30 percent in 1997 and another 12 percent in 1998.

Management decisions, not market, increasingly set public timber prices, McKetta said, making them less useful as a gauge for individual tree farmers. "Federal price trends are disconnecting from both lumber markets and private stumpage price behavior."

More salvage sales, lower-quality timber and trendy helicopter-logging requirements mean higher logging costs to cut logs with less value. "The result is substantially lower and erratic stumpage prices with many unsold sales," McKetta said.

Although stable lumber production has also stabilized markets for residual chips for pulping, prices changed locally, McKetta said. Coastal whitewood pulp prices rose 16 to 21 percent; alder pulpwood dropped as much as 16 percent.

A variety of factors caused delivered intermountain pulp log prices to drop 10 percent since fourth quarter 1997. McKetta predicts all pulp prices could rise. "When lumber production starts to follow declining lumber prices down, regional chip and pulpwood prices should jump." He sees faster lumber and sawlog price declines in 1999.

Because many national forests no longer sell large Douglas fir, hemlocks and pines, McKetta says, "higher grade logs of these species should get pricey."

That's why those uneasy about Wall Street's prospects might think about shifting their investment to their forest lands. Tax law changes,particularly in Oregon, sweeten that option, he added. "Reinvesting your stock market killing into thinning, fertilization and even pruning would yield quality trees sooner," he said.

Rising pulpwood prices could partially offset thinning prices. So could sales to new whip mills that can use logs down to 10 inches in diameter at the small end. McKetta warned that federal ecosystem management plans could glut small log markets.

According to Milling & Baking News magazine, which utilized UN World Food Program (WFP) information for its report, the large number of food crises in 1998 has put the world on alert for global food security in 1999. Economic collapses in Indonesia and Russia, a return to civil unrest in Kosovo and Angola, damages caused by El Nino-related floods, and Hurricane Mitch largest natural disaster to strike Central America in 200 years-were all part of a catastrophic 1998.

Said WFP executive Catherine Bertini, "Forecasts for 1999 show there will be an increase in the number of countries suffering emergencies and the number of people needing humanitarian assistance. We have to enter 1999 with the understanding that we may face an increased threat of famine, malnutrition and endemic hunger. ... The crises this year show that we now have to take into account new instigators of famine. We urge the international community to help us face this challenge in the year to come."

The University of Idaho College of Agriculture has added Glenn Shewmaker to its Twin Falls Research and Extension Center faculty.

Shewmaker, formerly of the USDA Agricultural Research Service at Kimberly, began his new job as extension forage specialist on Jan. 4. With a 70 percent extension-30 percent research position, he will emphasize alfalfa forage quality.

A native of Kimberly, Shewmaker farmed until 1983, when he joined the USDA. As a biological technician for the Agricultural Research Service, he worked with soil scientist Hank Mayland on research into forage mineral uptake and cycling through plant-animal systems.

He earned his bachelor's and master's degrees in animal science from the University of Idaho and completed his Ph.D. in range science, with an emphasis in nutrient cycling in plants, at Utah State University in December 1998.

Shewmaker says he accepted the University of Idaho position because the "job description was almost ideal for what I wanted to do and the timing was incredible."

He succeeds Bob Romanko, who retired a year ago. The position has since been moved from Parma to the more central location of Twin Falls.

The payback from recreation for rural counties depends largely on who came to play and may fall short of meeting the actual costs, according to University of Idaho economists.

In some cases, the economic benefits of recreation barely matches the costs of the services required by visitors during 1997, according to an analysis of Clark County in southeastern Idaho.

Agricultural economists Neil Meyer, Aaron Harp and Kevin McGuire compared the economic impacts and fiscal costs of public land recreation in their study published earlier this year.

Like many rural counties across Idaho, Meyer said, Clark County, population 822 in 1995, is mostly composed of state or federal land.

When timber harvests were higher on the Targhee National Forest, the county's budget fared well, receiving a quarter of timber sale receipts. Increased environmental protections and other factors cut those revenues. But the county's rural character and scenic charms continued to attract visitors.

"That revenue has gone down but the need to police the county is still there," Meyer said. "That's going to be true in every rural county in Idaho," he said. Clark County's businesses have a tough time capitalizing on visitors because most campers and hunters buy most of their provisions nearer to home.

Local governments underwrite services for visitors through property taxes or state and federal revenue sharing. Local option taxes or user fees, alternatives to help rural counties recover their costs, have been much discussed but never implemented.

The university has begun a similar study in Owyhee County and plans to conduct at least one more, in Valley County, Meyer said. "What I'm trying to do is raise this issue on the agenda," he said. There are real costs to tourism, such as law enforcement, search and rescue and emergency medical care.

The study's intent was to provide some real numbers as a basis for discussion. A more detailed study would be needed to provide a fuller picture, Meyer said, but the Clark County survey at least outlines the issues.

"Nobody likes taxes and fees but what's fair is the issue because most people will respond to fairness," Meyer said. "They may not like it but if they perceive it's fair they'll pay."

The study found the most lucrative time of the year for rural Clark County is approaching: snowmobiling season. Snowmobilers questioned during the study spent an average of $33.88, some 30 percent of the $114.38 they spent during an outing. Restaurant meals accounted for $15.88, nearly half, of the money the snowmobilers spent in Clark County, followed by fuel, $11.19 or 33 percent; groceries, $3.69 or 11 percent; and lodging $3.13 or 9 percent.

Summer campers at the Birch Creek Campground presented a sharp contrast. Campers surveyed at the Birch Creek Campground spent an average of $128.30 for a camping trip, but only $2.33 within Clark County.

Spending by hunters visiting Clark County varied depending on whether they visited during day trips or camped out and hunted several days. Hunters who drove to the county for the day, then returned home, spent an average of $159.72 but only $20.12 or 13 percent of it within the county. Hunters who camped in the county, spent an average of $236.03, $38.23 or 16 percent within the county.

Missing from the study, Meyer said, is a comparison of how much recreationists spent overall in the county with the costs. Credible estimates of the numbers of recreationists using Clark County were not available to make the comparison, he said.

Campers, who spent the least per trip, also cost the least overall. The study documented one law enforcement call to the Birch Creek Campground that cost the county $67.22 in employee and vehicle expenses.

Hunters cost the county $2,320.85, mostly for search and rescue efforts that totaled $1,219.81. Law enforcement calls for problems ranging from trespass to suspicious incidents, stranded motorists and missing hunters cost $768.73. The remaining $332.31 was spent to dispatch an ambulance for a hunter who died of a heart attack.

The county spent $1,079.71 on ambulance and law enforcement calls for snowmobilers during 1996 and 1997. To provide parking for snowmobilers or rescue snowmobilers snowed in by drifting snow, the county also spent $1,313.82.

Encouraged by the quality of soft white wheats from irrigated Idaho fields, Nabisco has entered into a one-year, renewable agreement with the University of Idaho College of Agriculture to develop premium soft whites for domestic use.

The New Jersey-based firm will support evaluations of lines developed by University of Idaho wheat breeders Ed Souza and Bob Zemetra using a new test called solvent retention capacity. This test will measure the unique contributions to end-use quality of each breeding line's cell wall components, proteins and starches-information that will indicate to breeders how to develop Idaho varieties with just the right stuff.

Nabisco will also fund seed increase of the most promising advanced breeding lines for pilot-scale manufacturing tests at its Buena Park, Calif., bakery. Cooperating in the agreement is the Idaho Wheat Commission.

"This is all very exciting for us," says Terri Volpe, senior director of manufacturing development for Nabisco in East Hanover, N.J.

"The interface that Ed, the university and the Extension program provide between the manufacturer and the agricultural sector is a very important role and one that's not easily found."

"Nabisco has been a technology partner, helping us to identify superior quality wheats like Whitebird and to improve our markets," says Souza. "For me, the exciting thing is that the new cooperative effort will allow us to do better research, growers to produce a better crop and Nabisco to serve its customers better."

Nabisco will not own the varieties or the information developed through the company's support, Souza says. "The information that we generate will be public. What's nice is that many of the characteristics Nabisco is interested in are not unique to their manufacturing processes.

Improved varieties will position us to sell to other domestic manufacturers as well-and to export markets."

Nabisco's goal is to help Idaho develop wheats that will consistently deliver moister, more tender products, Volpe says. Currently, products made from western wheats are noticeably harder, denser and more brittle than those made from wheats grown in other regions of the U.S.

Idaho's irrigated wheats show the most promise, says Volpe. "When we use flour from irrigated Idaho land, we get a much more tender product--and that's a win for us, because our consumers like tender products."

"A graham cracker needs to have the same texture, bite and flavor in California as it does in New Jersey," says Diane Gannon, manager of quality control for Nabisco's Toledo Flour Mill and chairperson of the firm's flour performance task force. "What we hope to have is a pool of wheats that are ideal for cookie and cracker manufacturers. By having that pool available, it creates a firm market for the state of Idaho for us to draw on for wheat for our products."

Key to the research is the solvent retention capacity test, developed by Nabisco researchers in 1994. "There are many, many tests that are currently established that tell us whether the flour will make a good cookie or cracker, but this is the first test that will help breeders and flour millers identify which component we need to work on to improve the functionality of the flour in a dough system," says Gannon.

Nabisco's support will allow Souza to provide both upgraded equipment and additional staff for the Idaho Wheat Quality Laboratory at Aberdeen.

Cardiovascular diseases kill moe than 950,000 Americans every year, says the American Heart Association. That's nearly twice as many deaths as from all forms of cancer&emdash;a life every 33 seconds.

Some people think life begins at conception, while others think life begins at birth.

But, some believe that life begins when the kid moves out and the dog he left behind dies.