Ag Economists Monthly Monitor

New Data: Is U.S. Agriculture Facing a Typical Cycle or a ‘Geopolitical Reset’?

Thu, 30 Apr 2026 18:56:48 GMT

The latest Farm Journal Ag Economists’ Monthly Monitor shows a bit more pessimism from respondents on the current state of the ag economy as well as how the present compares to one year ago.

Farm Journal regularly reaches out to a vetted list of 80 ag economists from across the industry. Providing directional insights, 10 of the 16 economists who responded to the April survey believe the ag economy is in a worse state than it was a year ago. Slightly fewer than half expect conditions to be “somewhat better” in 12 months, while one-third still anticipate further decline.

“I just haven’t really changed my level of pessimism regarding this year. This is going to be a tough year. There’s no doubt about it,” says Michael Langemeier with Purdue University.

The conflict in Iran weighs heavy on economists’ minds; high fertilizer prices and high energy costs dominate concerns. This overshadows the previous looming concerns of the trade fragility and export deficit. The previously announced government payments are in the rearview mirror.

Wes Davis from Meridian Agribusiness Advisors agrees that profit margins squeezed by high input costs are the top concern.

“When we talk about the more pessimistic view of the ag economy, fertilizer prices driven by the outbreak of war in Iran is certainly top of mind,” he says.

But Davis says there have been some positive tailwinds for commodity prices over the past few months, and there’s ‘no slowdown’ in demand for animal proteins.

“Those tailwinds continue to be present,” he says.

A Fundamental “Structural Shift”

Three-quarters of the economists believe U.S. agriculture is undergoing a permanent structural shift rather than a typical cyclical phase. They cite increased competition from Brazil, changing trade policies and the rapid adoption of artificial intelligence as factors reshaping the industry for the long term.

(Farm Journal Survey, April 2026)

“I’m thinking of this one as the geopolitical and input reset,” Davis says. “What I mean by that is, where things go and how we interact with the global ag economy when this cycle or when this shift is over will be different. The way that farmers get their agrichemicals, their fertilizers, their vitamins/trace minerals for feed, their tractors will all be different.”

Davis brings up the farm bill as another example. He questions whether the structural shift in policy is moving away from supporting “commercial farm preservation” and more toward “rural economic development.” This distinction could change the long-term framing of ag policy.

While Davis’ perspective is in the majority, Langemeier offers a counterpoint. He says this today reminds him a lot of the 2014 to 2019 period when there were about six years in a row of relatively low crop margins.

“I know there are a lot of changes going on, and certainly we’re worried about the competitiveness of U.S. agriculture compared to Brazil, particularly for soybeans,” he says. “As one example, I think the AI developments actually could be positive, and so I don’t necessarily see why that would necessarily mean a structural shift that would be negative.”

Geopolitical Impacts on Input Costs

The conflict in Iran and broader Persian Gulf instability are identified as primary drivers of agriculture’s economic health. Economists are specifically concerned about how these tensions are “pinching margins” by driving up the costs of energy and fertilizer while commodity prices remain relatively low.

“The negative impact of the Iran conflict has been increased fertilizer and energy prices. I did some crop budget calculations: If you hadn’t bought your fertilizer and most of your fuel is yet to be purchased prior to the Iran conflict that’s a pretty large effect on corn break-even price. I calculate it to be 25 cents a bushel. And when your break-even price is already at $5, which is way above what the futures price adjusted for basis is this fall, that’s certainly not helping matters,” he says.

It’s not just fertilizer and fuel. It’s other input categories in row crop agriculture and livestock production as well.

Noting input prices are 15% to 20% higher than pre-COVID levels, Davis points out that prices for active ingredients have gone up 20% to 30% since the conflict in Iran started.

“This continues to exacerbate that question around how long are we going to continue to see input prices increasing?” Davis says. “The other things that are less talked about but are starting to show up in pricing data are things like low inclusion additives for livestock feeds, so things like vitamins and trace minerals are starting to show up in pricing increases as well as they are being disrupted in trade flow and a slowdown of exports from China.”

Langemeier adds to the question around input pricing increases, saying it’s unknown if the uncertainty and elevated costs will go into 2027.

Strategic Deferment of Capital Expenses

To manage tight margins, farmers are expected to prioritize paying down debt over investing in land, equipment/technology, capital improvements and labor. Machinery and equipment purchases are the top items likely to be reduced or deferred in 2026, with half of economists also warning that cuts to fertilizer and crop protection could start impacting yields.

(Farm Journal Survey, April 2026)

“The number one thing as always is farmers want to be paying down debt,” Davis says. “Equipment is going to continue to be in a trough, and my expectation is that tractor sales year over year are still going to be 10 to 15% lower this year versus last year.”

He also foresees a continued transition to generic crop chemicals for the next two years.

Davis makes a distinction regarding which farms could survive this pinch on profitability. He describes a “tale of two economies” where disciplined farms with high liquidity can still find financing to grow, while those who grew aggressively at the peak of the cycle are facing a “pullback” from lenders. This adds a layer of nuance to the “commercial viability” discussion.

Langemeier provides a sobering warning about how farmers are managing the third year of low margins. He notes a trend of farmers starting to borrow against their land (non-current debt) to cover operating expenses — a pattern seen during the 2014 to 2019 downturn. He emphasizes the urgent need for “contingency planning” and a “Plan B” for debt repayment this fall.

“Usually, farms will try to cover their owner withdrawals and repay debt before they even think about making down payments on machinery. Capital expenditures always get squeezed when cash flow is tight. That’s just the way it works. We’re in one of those situations where capital expenditures are just going to be lower, primarily machinery and buildings,” Langemeier says.

Economists Forecast Farm Economy to Stabilize, But High Costs and Policy Uncertainty Block a 2026 Rebound

Wed, 07 Jan 2026 18:26:38 GMT

As 2026 ushers in a fresh start, agricultural economists say the U.S. farm economy has stopped sliding, but it’s far from fully healed.

The December Ag Economists’ Monthly Monitor shows month-to-month sentiment is improving, but deep structural strain remains — especially in row crops. Meanwhile, livestock markets continue to provide strength. Crop producers face another year of tight margins driven by high input costs, weak prices and unresolved trade and policy uncertainty.

“There’s cautious optimism,” the economists say, “but very little belief that 2026 will bring a meaningful rebound without cost relief or stronger demand.”

Those themes mirror the perspective of Seth Meyer, former USDA chief economist and now director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. In a recent interview, Meyer connected the dots between narrow margins, policy responses and what might actually move the dial for U.S. agriculture heading into 2026.

Stabilizing, Not Recovering

December Ag Economists’ Monthly Monitor

(Lori Hayes )

Economists see the ag economy holding its ground — but not gaining strength.

54% say the ag economy is somewhat better than one month ago.
Compared with a year ago:
- 42% say conditions are worse
- 33% say they are better
Looking ahead 12 months:
- 46% expect conditions unchanged
- 38% expect improvement
- 15% expect conditions to worsen

“Momentum has improved since mid-2025,” Meyer notes, “but tight margins have been with us for a long time. Turning that around requires demand growth, not just price stabilization.

Farm Journal’s December Ag Economists’ Monthly Monitor

(Lori Hayes )

Grant Gardner, assistant Extension professor at the University of Kentucky, tells AgriTalk’s Chip Flory: “I think as we move into kind of this next marketing year, you’re looking at what looks like a breakeven and not a loss, but breakeven still doesn’t look great after three years of breakeven or losses.”

He says even with the $11 billion in Farmer Bridge Program payments , it won’t drastically change the outlook for the farm economy.

“Purdue had a good survey about a month ago, where they looked at what were these payments going to go to, and research would show that a lot of these payments go into long-term assets, and so land tractors, but I think over 60% of producers right now are in such a tight cash crunch that you’re going to see a lot of these payments go into that short-term debt,” Gardner says.

Consolidation a Growing Threat

Economists are nearly unanimous that the crop sector remains under extreme financial stress. 83 percent say row crops are currently in a recession. That isn’t about production declines — acres and yields haven’t collapsed — but about persistently weak profitability.

“Negative returns for at least the third consecutive year across nearly all row crops,” one economist wrote in the survey.

Another said: “Margins remain below full costs of production for many producers.”

Farm Journal’s December Ag Economists’ Monthly Monitor

(Lori Hayes)

Meyer traces that back to how abruptly agriculture moved from the high prices of 2021 and 2022 into today’s tighter margins.

“We moved very quickly from a very high price environment and good profitability in 2022 to very tight margins,” he says. “That usually happens coming off price peaks, but this time it happened really rapidly.”

A minority of survey respondents argued farms are “treading water,” supported by strong land values and government aid rather than eroding further, which Meyer acknowledged aligns with how risk and safety nets have interacted this year.

But when you look at how the current stress in the farm economy could impact consolidation, the ag economists say it’s the economic pressure combined with demographic trends causing the acceleration. In fact, 92% of them say consolidation is underway and unavoidable.

“Markets go to the lowest-cost producers,” one economist wrote. “That sorting is consolidation on the production side.”

Aging producers exiting and rent-heavy operations under pressure only add fuel to that trend, with one economist saying: “Consolidation happens because producers have to exit, not because they want to.

What’s Driving the Farm Economy Right Now

When economists were asked to identify the two most important factors shaping agriculture’s economic health today, their responses clustered around a familiar, but increasingly sharp, divide: strong demand in livestock and the protein sector versus persistent oversupply and cost pressure in crops, all layered with trade and policy uncertainty.

Several economists pointed to continued strength in beef demand, both domestically and through export channels, as a key stabilizing force. While the dairy sector is an area that shows signs of weakness for 2026.

“Livestock revenues are a bright spot,” one respondent noted, underscoring why the livestock sector continues to outperform crops financially.

Looking to 2026, economists overwhelmingly point to input costs, not interest rates, as the biggest barrier to profitability. Nearly 70% cited input prices as the largest challenge as well, far ahead of trade concerns or capital availability.

Farm Journal’s December Ag Economists’ Monthly Monitor

(Lori Hayes )

“We have too much supply and not enough demand for row crops,” one economist wrote.

Another said: “Input costs are still too high.”

Trade remains a central wild card, especially relationships with China and uncertainty around global supply. Several respondents cited trade disputes and agreements as critical factors, along with questions about the size of South American crops and how that could shape global competition in the months ahead.

Policy uncertainty was also featured prominently, with economists pointing to domestic biofuels policy, government payments and broader market signals as factors influencing both short-term cash flow and longer-term demand growth.

Overall, economists say the ag economy is being pulled in opposite directions: strong livestock demand providing support, while crops struggle under high costs, oversupply and unresolved trade and policy questions — a dynamic that helps explain why the broader farm economy feels stable, but far from healthy, as 2026 approaches.

Livestock: A Continued Bright Spot

Livestock continues to stand out as the most financially healthy segment of the ag economy. Every economist surveyed rated beef as above average or excellent, supported by strong domestic demand and tight supplies. Dairy and pork were viewed as stable to moderately strong.

That success creates a stark contrast with row crops, where corn and cotton were cited by 38% each as the commodities most at risk financially in 2026.

What Could Move Crop Prices in the Next Six Months

Looking ahead to the first half of 2026, economists say crop prices will hinge less on domestic fundamentals and more on global supply, trade flows and policy clarity.

Across responses, South America emerged as the dominant influence, with economists repeatedly citing Brazilian weather, the size of the South American harvest and how those supplies compete with U.S. exports. Several noted that clarity around South American production will be critical in setting price direction for corn, soybeans and wheat.

Trade, particularly with China, remains another key swing factor. Economists emphasized not just the announcement of trade agreements, but whether purchases translate into actual shipments.

“China purchases of U.S. crops, but also if and when actual shipments occur,” one respondent noted, adding that details within any trade deal, including purchase commitments, will matter just as much as headlines.

Domestic factors still play a role, but economists see them as secondary in the near term. Input prices, early U.S. planting conditions and assumptions about 2026 acreage were all cited as important — especially as markets begin to trade expectations for next year’s crop mix.

Policy uncertainty also hangs over the outlook. Economists pointed to ongoing questions around trade policy, biofuels policy and broader economic conditions as variables that could amplify or mute price moves.

Economists say crop prices over the next six months are likely to be driven by how global supply unfolds, whether export demand materializes and how quickly policy uncertainty is resolved, rather than by any single domestic production shock.

Biofuels Policy: A Potential Turning Point?

One of the clearest themes Meyer highlights as a possible game changer for demand, and ultimately prices, is biofuels policy.

For economists, policy levers like year-round E15, Renewable Fuel Standard (RFS) volumes, 45Z investment tax credits and how small refinery exemptions are handled could meaningfully influence demand for corn and soybeans in 2026 and beyond.

“It’s one of the places where policymakers actually have levers to help with tight margins in the row crop sector,” Meyer says.

He emphasizes that final rules on RFS volumes and how biobased credits are implemented could impact feedstock demand.

“For the next couple of crop seasons, RVO (Renewable Volume Obligations) and how EPA reallocates small refinery exemptions are big factors,” Meyer says. “Should we raise the RVO to soak up that pool like a sponge? Should imported feedstocks get full 45Z credit? Those decisions could move demand.”

On year-round E15, a long-sought policy priority for corn growers, Meyer is cautiously optimistic.

“I do think it matters,” he says. “Maybe it’s not a huge swing this year, but offering certainty and building demand over multiple seasons is supportive. Other countries like Brazil are ramping up their biofuels production too, so this isn’t happening in a vacuum.”

Policy Uncertainty Still Looms

Economists also flagged top priorities for 2026 policy action:

Year-round E15 (row crops)
Trade policy clarity (row crops & livestock)
Labor reform and regulatory issues (livestock)

They also highlighted under-covered risks, which include pressure on land rents and values, labor shortages, biofuels policy details (such as 45Z credits) and slower population growth affecting long-term demand.

What Could Move Livestock and Dairy Prices in the Next Six Months

When economists look ahead to livestock and dairy markets in early 2026, they see a mix of strong demand signals, supply-side risks and policy uncertainty shaping price direction.

Consumer demand remains the cornerstone of the outlook, particularly for beef. Several economists pointed to continued buying interest from U.S. consumers as the primary support for cattle prices, even as affordability pressures rise. At the same time, some warned that a more “K-shaped” economy could begin to shift demand, pulling some consumers away from beef and toward pork.

Supply dynamics and herd trends are another major focus. Economists cited herd size, potential herd expansion and the availability of feeder cattle as critical variables. The expected resumption of feeder cattle imports from Mexico was highlighted as a key factor that could influence cattle supplies and pricing, depending on timing and volume.

Animal health risks also remain on the radar. Issues such as avian influenza, screwworm and other disease threats were mentioned as potential disruptors that could quickly alter supply conditions in both livestock and dairy markets.

Policy and trade uncertainty continues to hover over the sector. Economists pointed to ongoing questions around tariffs, restrictions on live animal trade with Mexico and the next steps under the USMCA as factors that could impact both imports and exports. Political uncertainty more broadly was also cited as a potential source of market volatility.

For dairy, economists noted that beef-on-dairy dynamics are likely to continue weighing on milk prices by increasing beef supplies while complicating dairy herd decisions.

Taken together, economists say livestock and dairy prices over the next six months will be driven by a delicate balance between strong consumer demand, evolving supply conditions and unresolved trade and policy questions, with any shift in one of those areas capable of moving markets quickly.

Acreage Expectations: Stress, Not Shock

Despite margin pressure, economists do not expect dramatic acreage pullbacks in 2026. Most expect:

Corn: 93 to 95 million acres
Soybeans: 84 to 86 million acres
Wheat: 44 to 45 million acres
Cotton: 9 to 10 million acres

Corn acreage expectations have edged lower since November, as economists backed away from another year above 95 million acres. At the same time, soybean acreage expectations have firmed, with 75% now targeting 84 to 86 million acres, suggesting stronger relative economics for beans.

“Export demand has helped keep corn acres supported,” Meyer says. “The question is whether that demand holds and whether policy supports it.”

As for acreage, the major impact on prices would be a large acreage reduction, which is unlikely.

“That’s what it comes down to, too. What I’ve been thinking about is what else can you use land for? And you’ve got the pushback on urban sprawl, you’ve got pushback on other uses for ag land. But right now, the simple fact is we’ve got way too much production. Without that slowing, or a drastic increase in demand, I don’t see prices improving to very lucrative levels,” Gardner says.

Overall, The Ag Economy Is a Grind, Not a Rebound

When you look at all the results from the December Ag Economists’ Monthly Monitor, economists paint a picture of an industry that has stopped getting worse, but has not yet found a path to durable profitability.

Crops remain mired in margin compression; livestock continues to outperform but remains sensitive to policy decisions. Government aid is buying time but not addressing structural challenges, but it’s policy outcomes, especially around biofuels, trade and E15, that could be decisive in shaping 2026 outcomes.

For now, the farm economy has found a floor. The tougher question, economists say, is whether policy can help lift it, or if it will continue to grind forward without a genuine rebound.

Related News: As Screwworm Inches Closer, When Could the U.S. Reopen the Southern Border to Cattle Imports?

As Screwworm Inches Closer, When Could the U.S. Reopen the Southern Border to Cattle Imports?

Tue, 06 Jan 2026 20:49:10 GMT

A newly confirmed case of New World screwworm (NWS) in northern Mexico is renewing concern among U.S. cattle producers and policymakers, as the parasitic fly continues to inch closer to the U.S.-Mexico border.

As reported by Drovers, on Dec. 27, Mexico’s National Service of Agro-Alimentary Health, Safety, and Quality (SENASICA) reported a case of NWS in a 6-day-old calf with an umbilical lesion in the municipality of Llera, located in the state of Tamaulipas. The location is approximately 197 miles south of the U.S.-Mexico border, and a reminder that NWS is still a high threat to the U.S.

Critical Timing with Calving Season Approaching

NWS, which was eradicated from the U.S. in the 1960s through an extensive sterile fly program, poses a serious threat to livestock. The larvae infest open wounds, feeding on living tissue and often leading to severe injury or death if untreated. Calving season is considered a particularly vulnerable period due to natural points of entry such as navels and birthing injuries.

Seth Meyer, director of the Food and Agricultural Policy Research Institute (FAPRI) and former chief economist for USDA, says the new case raises a tremendous amount of concern as USDA remains vigilant on keeping NWS out of the U.S. But Meyer says the growing proximity of NWS complicates already difficult decisions for cattle producers at calving season , which is a critical time of the year.

“There are concerns not just from a consumer standpoint, but also about whether southern producers are willing to retain heifers during calving season if there’s a risk of fly exposure,” he says. “Calving is a point of access for these animals, and that risk matters.”

Those decisions could have longer-term implications for herd expansion and cattle supplies, Meyer notes. If producers decide the risk is too great and opt against retaining replacement heifers, it could tighten supplies further down the road.

“That’s the last thing you want,” Meyer says. “You don’t want people giving up on retaining heifers and turning away from herd rebuilding.”

The Possibility of Reopening the Southern Border

The U.S. most recently closed its southern border to Mexican cattle imports in May of 2025 due to the rapid spread of NWS in Mexico. There were additional closures and reopenings in July 2025 as the situation evolved ultimately halting trade again to protect U.S. livestock.

Here’s a timeline so far:

November 2024: NWS was first detected in southern Mexico, leading to initial border closures and trade disruptions.
Feb. 1, 2025: A temporary ban was lifted after agreements for inspections.
May 11, 2025: U.S Secretary of Agriculture Brooke Rollins ordered an immediate suspension of imports due to NWS spreading closer to the border.
July 2025: A phased reopening began but was halted again after new NWS cases were found farther north, leading to another immediate closure of southern ports to protect American livestock.

Considering the cattle just south of the border are being vigilantly monitored and inspected, the bigger threat of NWS crossing the Southern border could be through wildlife . Still, as NWS gets closer, USDA is keeping the border closed and remaining cautious.

When could the U.S. reopen the border? That’s exactly what Farm Journal asked economists in the latest Ag Economists’ Monthly Monitor and the responses were extremely mixed. It’s important to note the survey was sent out prior to the most recent detection of NWS.

33% of economists say USDA could reopen the border in February 2026
25% say it could happen April through June
17% think the border could reopen July through September
And 17% were unsure.

For policymakers, the situation adds another layer of complexity as they balance animal health, trade and producer confidence. While officials stress that there is no immediate threat to the U.S. herd, the latest detection underscores the importance of surveillance, rapid response and continued cooperation between U.S. and Mexican animal health authorities.

As Meyer puts it: “There are a lot of balls in the air right now,” and preventing NWS from crossing the border remains a critical priority for the livestock industry on both sides.

Follow Farm Journal’s extensive coverage of the ongoing NWS situation.

$4 Feeder Cattle: Dream or Reality?

Tue, 28 Oct 2025 14:50:41 GMT

As October draws to a close, U.S. officials are reportedly going to meet with Mexican counterparts this week to talk about reopening the border . The possibility of trade resuming, coupled with President Donald Trump’s comments on lowering beef prices and Agriculture Secretary Brooke Rollins’ announcement to “fortify the beef industry,” sent the cattle market spiraling in recent days.

Despite the downturn, the fundamentals haven’t changed: reduced supply and strong consumer demand are fueling record-high market prices.

“The reduction in available supply and robust beef demand to-date has clearly provided price support,” says Glynn Tonsor, Kansas State University professor of agricultural economics. “Tied to that is the biggest risk in my opinion — beef demand. Anything that erodes beef demand strength, most likely macroeconomic and consumer income in nature in my opinion, will put downward pressure on cattle of all weight classes.”

Tonsor says he never gave $4 much thought until the past couple of years.

“If we adjust for inflation or consider production costs, $4 feeders aren’t what they used to be. It takes $4-plus feeders to generate the net returns we used to get from lower prices,” he explains. “These are profitable prices for ranchers — and it’s about time.”

Tonsor predicts feeder cattle prices to continue under current conditions but does not predict increased profitability due to increasing operating costs.

“The 2025 bull market has been exceptional by every measure,” summarizes Lance Zimmerman, RaboResearch Food & Agribusiness senior beef industry analyst. “500-lb. steer prices are now more than 50% higher than last year, and 800-lb. steer prices are nearly there at just under a 50% price increase year-over-year.”

As a frame of reference, the CME feeder cattle cash index, which captures the average 700 lb. to 899 lb. steer price, averaged $367.08/cwt. the week of Oct. 20. This fall, livestock auction markets across the country have reported lightweight feeder cattle surpassing the $4 mark.

“I think it is entirely possible for feeder cattle to get to $4,” says Don Close, Terrain Ag senior animal protein analyst. “However, I think it will be late summer and fall 2026.”

According to Close, there are three critical components for feeder prices today:
1. Mexican border reopening
2. What disruptions could come to the beef-on-dairy supply
3. Feed prices

“Of that list, Mexico border closure is the real wild card,” he explains. “I don’t see a measurable disruption to beef-on-dairy or feed costs in the near term.”

When Will We Hit the High?

Oklahoma State University’s Derrell Peel, Extension livestock marketing specialist, explains the highest average prices are likely a year or more after heifer retention begins.

“We don’t have any confirmation heifer retention has started to any significant level in 2025,” Peel says. “We have already pushed off any signs of herd rebuilding by one to two years longer than I earlier expected, and we are looking at extending it another year if heifer retention does not start in the fourth quarter. Because the response has been much slower this time than previous cattle cycles, prices have certainly gone higher than I would have expected a year or two ago — though I did expect record-high prices.”

Peel predicts the next expansion phase will be different than the 2014-19 expansion cycle.

“The 2014-19 herd expansion was historically rapid, this current one is historically slow,” he says. “It is a combination of a lengthy list of factors that combine to make this a slow response, and it looks like it will remain a slow, lengthy process.”

Close shares his thoughts on the complexities of the current cycle:

Drought and economic stress. “As an industry, we didn’t fully recognize the severity of the drought as well as the degree of economic stress to the sector,” he says. “The fallout of the 2014 to 2015 price drop is still fresh on producers’ minds, so they have been using the prices of the past three years to get balance sheets in order, pay down debt and now are starting to make capital improvements.”
Producer age. “The average age of cow owners is a factor, so many have used current prices to liquidate and retire,” he says.
Female costs. “Replacement female prices that range from $3,000 to $5,000 restricts and scares some away,” he says. “That is only compounded with the addition of current interest rates.”
Cow size. The escalation in average cow size limits how many cows can run on a given unit of pasture.“
Land. “You hear producers make comments on the difficulty to find additional pasture in order to expand,” he says.

“This cycle has been driven or limited from a combination of all the above,” he says. “Our view is we need to rebuild by 2 to 2.5 million head. Keep in mind, given the escalation in carcass weights, we don’t need as many cattle to produce an equal quantity of beef.”

Close adds his thoughts regarding the impact of last week.

“Given all of the turmoil over the past week it is going to be even more difficult to trigger expansion,” he says. “There is no work around for destroyed producer confidence. I think current market action will further delay expansion.”

Ag Economists’ Monthly Monitor Predicts Bull Market to Continue

Cattle prices are expected to stay high well into 2026, according to the latest Ag Economists’ Monthly Monitor from Farm Journal. Nearly half of agricultural economists surveyed (47%) believe the current bull market in cattle could continue another 19 to 24 months, while another 27% say it could last 13 to 18 months. Only 7% expect prices to peak within the next six months.

“This run isn’t over,” one economist wrote. “At current prices we will see no or little herd expansion.” Another adds the fundamental supply side remains tight: “Clear signals that domestic beef production is increasing may be the key catalyst for a market top.”

“This is a nature of biology to some extent, it takes a while once you even start to retain a heifer for that heifer to produce a calf that then becomes a feeder calf that then becomes a fed calf that then becomes beef at the grocery store itself,” says Ben Brown, an Extension economist with the University of Missouri. “I don’t think we’ve seen necessarily the top of this cattle market yet.”

Even if cattle prices are close to seeing a top, that doesn’t mean prices will crash, he adds.

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

What Could End the Rally?

When asked what might trigger a peak in cattle prices, responses to the Ag Economists’ Monthly Monitor were mixed — but demand destruction and herd rebuilding topped the list. Economists were asked to choose between five options, including:

The reopening of the U.S./Mexico border to Mexican feeder cattle imports
U.S. economic concerns with fallout from trade tensions with China
Removal of tariffs that would resume high levels of beef imports from Brazil
Demand destruction in the U.S. market

One respondent notes, “All of the above are relevant, but clear signals that domestic beef production is increasing may be more important.” Others pointed to a slowing U.S. economy or producers “beginning to hold back replacement heifers” as potential turning points.

“I have no idea what creates the top, but at current prices, we will see no/little herd expansion,” adds yet another economist.

“Beef Prices Can Stay High Longer Than Most Expect”

Economists agree the U.S. cattle market remains fundamentally strong, supported by limited supplies, robust export demand and solid retail prices. However, they caution the same forces keeping prices high — tight herds, high feed costs and inflation — could eventually cool the rally.

As one economist sums it up: “Beef prices can stay high longer than most expect — until consumers finally say ‘enough.’ That’s when we’ll see the turn.”

U.S.-Mexico Border Battle Continues As the Threat of New World Screwworm Intensifies

Wed, 24 Sep 2025 20:04:07 GMT

With New World screwworm (NWS) confirmed just 70 miles from the U.S. border , producers, government officials and industry leaders are taking action. Finding NWS along one of the most heavily trafficked commercial thoroughfares in the world from Monterrey, Nuevo Leon, to Laredo, Texas, is a red flag for the industry. Emphasizing the importance of maintaining strong safeguards, it’s time to plan for not “if but when” NWS crosses the border.

On Monday, Secretary of Agriculture Brooke Rollins confirmed protecting the U.S. from NWS is non-negotiable and a top priority for President Trump.

UPDATE ON SCREWWORM THREAT:

Protecting the United States from New World Screwworm is non-negotiable and a top priority for @POTUS.@USDA landed boots on the ground this morning in Nuevo Leon, physically inspecting traps and dispersing sterile flies after the detection of the…
— Secretary Brooke Rollins (@SecRollins) September 23, 2025

“The southern border remains closed to livestock trade, and we are aggressively expanding trapping and surveillance,” she wrote. “At the same time, we’re expediting operations at our sterile fly dispersal facility at Moore Air Base in Texas .”

On Tuesday, Secretary of Agriculture Brooke Rollins reported 80,000 sterile flies were released on “spot” and nearly 200 surge staff had been deployed to Mexico.

Thank you, @IngrahamAngle, for paying attention to this important issue. Due to multiple failures from our southern neighbors and failure to act in the last Admin, the devastating parasite New World Screwworm is knocking on our southern borders door. We’re not waiting, we’re… pic.twitter.com/ZO5Vx5oes8
— Secretary Brooke Rollins (@SecRollins) September 24, 2025

Mexico’s Response To New World Screwworm

According to Reuters, Mexican’s agriculture ministry said there is no risk of adult screwworm fly emergence due to the early detection of the infected bovine, which was confirmed on Sept. 21. The infected animal was in a shipment of 100 animals originating from the Gulf Coast state of Veracruz, according to the statement.

Fly traps in northern Mexico have not detected a single screwworm fly.

U.S.-Mexico Border Remains Closed to Cattle Trade

The Mexican border closure remains a topic of debate. The September Ag Economists’ Monthly Monitor found 80% of ag economists surveyed oppose reopening the border to Mexican cattle due to screwworm risks.

(Farm Journal)

The border closure has created significant division within the cattle industry with producers, feeders and industry leaders on both sides of the fence.

“We have some cattle people that are glad it’s closed. We’ve got others who are hit pretty hard and are not happy about it,” explains David Anderson, Texas A&M professor and extension specialist — livestock and food product marketing.

NWS is a threat the industry can not ignore, says the ag economist with more than 30 years under his belt.

“I think this is the most serious problem the industry has faced since I’ve been a livestock economist,” he stresses.

From his perspective, keeping the border open with heightened monitoring and surveillance could have potentially been more effective than implementing a total closure.

“If we go back and look at data from the early ‘70s, when we had a big screwworm outbreak in the U.S. and Mexico, the border was open,” he says. “I probably would have leaned to not closing the border to begin with. I understand why you would want to do that, but I don’t know that it’s ended up reducing the likelihood that we’re going to get screwworms, and yet we’re paying a price for that.”

According to Anderson the economic consequences to the border being closed are:

Significant loss of approximately 26,000 imported cattle weekly
Estimated 18% reduction in cattle placements in Southern plains
Contributed to tighter beef supplies and higher consumer prices
Substantial economic hit to cattle feeders and ranchers

At this point, he’s quick to admit keeping the border closed is the best option.

When it comes to reopening the border, Derrell Peel, Extension livestock marketing specialist with Oklahoma State University, suggests the decision is not straightforward.

“Given everything I’ve experienced, it’s probably prudent to leave the border closed,” he says.

He adds any reopening should be “under very, very controlled, limited circumstances.”

Peel emphasizes the need for a collaborative approach with Mexico.

“We’re kind of in it together, and so whether it’s here or there, we’ve got to work together,” he summarizes. “We’re going to need to control it in both places. Otherwise, it’s not going to benefit either one of us.”

He also points out not everybody in Mexico is sorry the border is closed. For example, cattle buyers in Mexico can source cattle cheaper because the border is closed.

“Keeping the border closed does affect the movement of cattle south of the border ... it builds a backstop for cattle movement north,” he adds.

Peel notes cattle from Central America to Panama have increasingly made their way to the Mexican market, which validates NWS movement in Mexico and why recent confirmation has occurred.

“The longer this goes on, the more the Mexican industry will adjust,” he says. “It might permanently change the way the [U.S. and Mexico] work together.”

Texas Rancher Weighs In On Impact of New World Screwworm

Texas rancher Wayne Cockrell says the parasite’s entry into the U.S. is inevitable, suggesting that winter and colder weather might temporarily delay the spread until next April or May. Cockrell, who serves as the Southwestern Cattle Raisers Association director and chair of the cattle health and well-being policy committee, recently joined AgriTalk to talk about NWS.

“We would much rather stop this on Mexico’s southern border than our Southern border,” Cockrell says.

Mexican feeder cattle traditionally represented 30% of Texas feedyard inventory, he adds, but with current restrictions, feedlots are adapting.

“I think a lot of those feedyards have moved to the dairy-cross side,” he adds. “They have had to change the way they do business.”

Noting the broader economic implications of the border closure, 1.2 million fewer cattle for Texas represents “about two weeks” of impact nationwide, according to Cockrell.

“Winter and sterile flies is what we need now,” Cockrell summarizes.

Your Next Read: The Smell You’ll Never Forget: A Calf Infested with New World Screwworm

Is the Ag Economy in a Recession? Why Economists and Farmers Don't Agree

Mon, 11 Aug 2025 16:39:39 GMT

Fewer agricultural economists think the row crop side of agriculture is currently in a recession, but when you consider most major row crops are seeing four consecutive years of poor profit margins, farmers argue an agricultural recession is currently underway.

Fifty-three percent of agricultural economists surveyed in Farm Journal’s July Ag Economists’ Monthly Monitor say the row crops side of agriculture is currently in a recession, which is down from the 72% who responded that way in May .

For the 53% who think agriculture is in a recession, economists argue the poor profit margins and another year of projected negative returns mean any cash reserves are being drained.

In the July survey, economists said:

“While the BBB will raise reference prices for the ARC and PLC, current market prices remain low, and crops went in with expensive inputs, so most producers are going to have a hard time profiting under the current conditions. Losses may be lessening but it’s a tough situation for grain producers.”
“2025 is bringing negative returns for at least the third consecutive year across nearly all row crops, with 2026 setting up to be another negative returns year.”
“Farmers are seeing cash flow drain and lower revenues compared to the past two years.”

The negative returns projected for 2025 and 2026 aren’t just due to low commodity prices, but the fact input prices, like fertilizer, are trending higher.

The poor profitability picture is impacting nearly every major row crop in the U.S., with at least four consecutive years of negative margins when you look at just the price versus costs.

(Krista Swanson, National Corn Growers Association )

Krista Swanson, chief economist for National Corn Growers Association (NCGA), says poor profitability margins are projected for every major commodity in the U.S.

“I think the big concern, especially as we turn to looking at 2026, is that we’re talking about for almost every single crop, 2026 being at least the fourth consecutive year of negative returns, and we’re not just talking about small negative returns on average, but over $100 an acre losses, and again, that’s not accounting for crop insurance or any government payments that is specifically looking at costs and returns from those grain sales,” Swanson says.

Why Some Ag Economists Argue Agriculture Isn’t in a Recession

Additional farm program payments from Congress, along with the fact land prices aren’t declining, are two reasons 47% of ag economists argue the ag economy isn’t in a recession.

In the July survey, ag economists who say the row crop side of agriculture isn’t in a recession, gave the following reasons:

“Farm program payments and strong corn exports. Land prices also do not appear to have declined, according to the August land report from USDA.”
“Although prices are currently low, production prospects are very good, supporting expected crop revenue and lowering crop cost of production per unit.”
“Prices and income are down sharply from their 2022 peak. Defining a ‘recession’ for a sector is difficult. To me, it implies a temporary downturn, but something like current prices appears more likely to be ‘the new normal’ than a temporary blip.”
Although crop farms have been facing considerable financial challenges, so far, farm finance has been sustained by cutting down on some of their working capital. I would worry about the actual (bigger) recession possibly to come. In my opinion, tariff effects will be less likely to take place immediately in this harvest season, but the shock (without negotiation scenario) will likely hit the farm input cost first, threatening farm financial health of 2026.”
“Government payments and crop insurance guarantees are removing the downside risk that would typically allow input costs to reset.”

Ohio State’s Carl Zulauf agrees a price squeeze is impacting margins for farmers, but a big piece of why he doesn’t think U.S. agriculture is in a recession is land values.

“It’s a price squeeze on the input prices versus the cost of the output prices,” Zulauf says. “But I think for the farm economy to be in a recession, you have to see some softening land prices both on the rental side and on the ownership side. And USDA just released on the first of August their latest land estimates, and I think a fair characterization of it is that land values were up, cash rent was stable to slightly up. That does not corroborate in my mind with a sector that’s in recession.”

American Farm Bureau Federal looks at how land values have trended over time. This is based on the latest UDSA NASS data.

(American Farm Bureau Federation (AFBF))

USDA’s annual land survey released earlier this month shows on average, land real estate values came in at $4,170 per acre in 2025, which is a 4.3% increase from 2024.

Zulauf says you can make an argument that land values are holding steady because of government payments.

“But the point is that government payments are at least apparently keeping the land price in check,” he says. “And that’s a really big thing because of borrowing capacity and all that that goes along with asset prices.”

Not Just the Midwest and South Feeling the Financial Pinch

July Ag Economists’ Monthly Monitor

(Lindsey Pound )

The latest Ag Economists’ Monthly Monitor also asked which region of the country is seeing the most severe financial pressures impact farmers.

38% responded the Midwest
15% said the Mid-South
8% responded the West
8% also said the Northwest

“The first thing I have to remind everybody is we are incredibly diverse,” says Dan Sumner, an agricultural economist with the University of California, Davis. “So the top ag commodity in California is milk. And milk isn’t doing that bad these days in terms of prices. Beef is also a huge part of our economy. So I picked the two that are doing OK. The rest of them are struggling.”

He says from tree nuts to fruit and grapes, growers in California are also struggling with lower prices and higher costs.

He says the grape industry, especially wine grapes, are struggling with a demand problem. Tariffs and the uncertainty surrounding trade is also impact tree nuts and other fruits.

“Since China used to be such a big market for them, and China, you’re dealing with the government there. So you could write down what the tariffs are, and then you write down what the government policy says to the importers, and of course they’ve got their centrally planned economy. So it’s been tough on tree nuts with the loss of that Chinese market,” he says.

What to Watch Over the Next 12 Months

Economists say trade will play a major factor in the health of the ag economy over the next 12 months. It’s not just how the tariff issues are resolved, but with which countries the U.S. is able to strike trade deals.

“What happens with trade/tariffs is likely the biggest factor now and over the next 12 months across all of agriculture. I’ve made this statement in the past, but it continues to be the biggest wild card that could boost or harm the ag sector. Another factor I’m watching in the short term is crop size,” said one economist.

When asked to outline the two most important factors that could impact the ag economy over the next 12 months, economists varied in their responses, but said:

Trade negotiations
Government payments and farm safety net programs
Crop prices versus production costs
Strength in livestock markets
Biofuel policies
Interest Rates

Economists say provisions within the One Big Beautiful Bill are also important to agriculture over the next 12 months.

“The two most significant drivers are the recently passed Big Beautiful Bill that will spend about $50 billion on commodity programs over the next 10 years, as well as recently announced trade deals,” said an economist in the anonymous survey. “Increased reference prices in the BBB will help support farm income, and it appears the administration is making a point of securing deals for ag as part of the trade pacts being negotiated. These both bode well for agriculture.”

59% of Ag Economists Think Congress Won’t Pass a New Farm Bill Until 2026

Thu, 08 May 2025 21:44:55 GMT

It’s a contentious battle continuing to play out in Congress. Two years overdue, Congress still hasn’t passed a new farm bill, and as the calendar approaches the half-way point of 2025, optimism of passing a farm bill this year is waning.

The April Ag Economists’ Monthly Monitor found most agricultural economists think it could be 2026 before we see Congress finally pass a new bill. One reason why, according to agricultural economists, is the fact Congress passed $10 billion in financial relief payments late last year.

The April Monthly Monitor asked the nearly 70 ag economists surveyed each month when they think Congress will pass a new farm bill:

59% said 2026
24% think it won’t happen until 2027
18% said the second half of 2025.

April Ag Economists’ Monthly Montior

(Lindsey Pound)

None of the economists think Congress will pass a new farm bill in the first half of 2025. The survey also asked economists, “Does the Emergency Commodity Assistance Program (ECAP) program make it more difficult for Congress to pass a new farm bill this year?

62% said yes
38% responded no.

Most major agricultural groups argue that the current farm bill is outdated. Passed in 2018, it was designed to cover five years. Congress has passed an extension for two straight years that’s helped agriculture limp along, but another extension might not suffice in addressing the current financial pain being felt on the farm, especially for cotton and rice farmers.

Other Hurdles for Passing a Farm Bill in 2025

Even with the GOP in control of the House and Senate, it’s no secret one of the main obstacles in passing a new farm bill, or any bill in Washington, is the budget.

The April Ag Economists’ Monthly Monitor asked economists what are the biggest hurdles in passing a new farm bill, the top response was budget. But economists also say Congress is racing against a calendar, and deeper cuts to SNAP could end up hurting agriculture priorities in the end. One economist even argued ARC and PLC just aren’t effective programs.

“The farm bill just isn’t as important to the administration as is getting their policy agenda through Congress,” said one economist.
“The budget. If farm legislation is approved in 2025, it will likely be part of the budget reconciliation bill and passed without Democratic support, meaning increased support for farmers is provided by deeper cuts in SNAP. Only if that effort collapses is there any real possibility of a bipartisan farm bill,” said another economist in the anonymous survey.
“In general, Congress has difficulty passing any legislation. This is very detrimental to the long-run health of U.S. agriculture and the U.S. economy. We simply have to address entitlements and deficit spending in the next few years.”
“If the new farm bill has to have no new spending similar to the 2018 farm bill, then which title wins and which title loses is the biggest fight,” an economist said in the April survey.
“They have to be working on a bill first. Currently, I do not think a bill is even in the works,” said another economist.
“Pushing back on SNAP,” stated an economist.

Bottom line: The likelihood of passing a farm bill this year is low. Both the Senate and House Committees say it’s a top priority and are working behind the scenes to get a farm bill passed this year, but similar bottlenecks remain, which are a lack of additional funding and a polarized Congress. Debates were heated this week, and the blame game continues. Until Congress can find a way to compromise on Title I and SNAP, the stalemate could continue.

Concerns About a Recession in Agriculture

The farm economy doesn’t seem to be improving. The latest Ag Economists’ Monthly Monitor shows agricultural economists are also growing more pessimistic about the ag economy. The April survey found 72% of ag economists say the row crop side of agriculture is in a recession, up from 62% last month. Eighty-two percent of economists also think this could force more consolidation in agriculture.

Economists Fear Trade War Will Push Agriculture Deeper Into a Recession

Fri, 02 May 2025 17:19:12 GMT

Agricultural economists are growing even more pessimistic as the latest Ag Economists’ Monthly Monitor shows the majority are concerned President Donald Trump’s tough stance on trade could push agriculture deeper into a recession while also giving Brazil more of a competitive edge. As one economist stated, the stakes are high, and the key is whether Trump’s policies push ag deeper into a recession, and if U.S. agriculture can survive without China.

The Ag Economists’ Monthly Monitor is a survey of nearly 70 agriculture economists nationwide. This month, 72% of those surveyed say the row crop side of agriculture is in a recession, up from 62% last month. Eighty-two percent of economists also think this could force more consolidation in agriculture.

Despite Trump’s 90-day pause on tariffs for most countries except China, economists stress agriculture is in peak uncertainty.

Of the 72% who think agriculture is in a recession, their reasons are:

Compressed margins and concern about operating debt carried over from last year.
Prices for most crops have declined more than production expenses since 2022.
Negative returns for at least the third consecutive year across nearly all row crops.

Yet, the 28% who believe the crops side of agriculture isn’t in a recession say:

“Profit opportunities are there, but slim.”
“Economic performance and growth of U.S. ag is slowing and/or stable but not declining. It’s too early for the impacts of tariffs to change ag business decision-making.”
“Given the volatility in the crop session, a recession requires at least two bad return years, where returns include both private market and government payments. We do not know about 2025 yet, nor do we know the extent of government payments for 2024 crops yet and thus what will be the total return for 2024.”

Economic Drivers

In the survey, 42% of economists said the current state of the ag economy is “somewhat worse” than a month ago, while 26% said it’s unchanged. But when you compare outlooks to a year ago, 58% of economists responded the ag economy is somewhat worse.

Ag Economists’ Monthly Monitor

(Lindsey Pound )

Economists were asked to list the two most important factors driving agriculture’s economic health today, as well as in 12 months. Tariffs and trade war topped the list.
“Weather will always be one of the primary factors, but we can add President Trump’s efforts to restructure global trade to that list this year. We’re in worse shape if he fails and better shape if he succeeds. Big stakes,” one economist said.

In addition to tariffs and the trade war, economists also said:

Inflation
Interest rates
Political uncertainty
Consumer demand
Status of trade issues and the supply-side (crop size) of the balance sheets.
The inability of farmers to manage price volatility due to uncertainty around trade

High Stakes with Trade

Agriculture is an export dependent business. According to the Trump administration, when it comes to tariffs and the impact on the overall economy, long-term gain will be worth the short-term pain. However, when it comes to agriculture, the economists surveyed don’t agree.

When ag economists were asked if they think Trump’s strategy of using tariffs as a negotiating tool will benefit U.S. agriculture in the long run:

76% responded no
24% responded yes

April Ag Economists’ Monthly Monitor

(Lindsey Pound)

Since the last trade war, Brazil has gained ground and displaced the U.S. as the top corn exporter in 2023. Economists believe it won’t be the U.S. benefiting from this trade turbulence, but instead these competitors:

Brazil (76% of responses)
China (12% of responses)
India (6% of responses)
Ukraine (6% of responses)

Will Farmers Be Compensated for Short-Term Pain?

As Web reported, Agriculture Secretary Brooke Rollins has stated since winter that if farmers suffer financial pain from the trade war, the Trump administration will look at compensating farmers at some point.

April Ag Economists’ Monthly Monitor

(Lindsey Pound)

Of the economists surveyed, 89% think USDA will compensate farmers with financial payments, similar to what the previous Trump administration did with the Market Facilitation Program Payments (MFP). However, 80% of economists say it’s too early for USDA to be considering compensating farmers for financial fallout.

Bottom line:

The risks are high. Unless the U.S. invests in domestic manufacturing over an extended period, the loss from exports could be a big hit to ag commodities. But if the Trump administration can gain more trade access to key countries, the rewards could be even bigger.

Your Next Read:

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

Economists Fear the U.S. Will See a Recession in 2025, And That Could Eat Into Consumers' Demand for Meat

Fri, 28 Mar 2025 17:56:25 GMT

Consumer meat sales hit record-breaking levels last year. The craze for protein-filled diets has been a storyline that’s helped drive meat demand, which is good news for meat producers. Ag economists warn, however, the major limiting factor for meat demand, and meat prices, in 2025 just may be what happens in the overall economy.

The March Ag Economists’ Monthly Monitor asked economists if they think the U.S. general economy will see a recession in 2025, and 62% said yes.

Recent reports agree with that sentiment, as the Federal Reserve’s key inflation index rose more than expected in February and consumer spending posted a smaller-than-projected increase, according to the Commerce Department. Both could be warning signs of what’s ahead.

As a follow up question, The Ag Economists’ Monthly Monitor survey asked, “In what ways does the U.S. economy impact meat demand in 2025?” Respondents had no shortage of opinions on that.

Here’s a rundown of some of their reactions:

“If real wages fall, there will be a substitution toward other protein/cheaper meat cuts.”
“Slower growth (even if the U.S. does not endure a recession) will reduce consumer willingness to spend, especially at a time when beef prices, in particular, are high.”
“A downturn in economic growth impacts disposable income and should slow animal protein demand.”
“There is a positive correlation between GDP and meat demand, particularly between GDP and higher end cuts.”
“When the U.S. economy is strong and incomes increase, consumers have more disposable income to spend on meat and higher quality cuts of meat. When the U.S. economy is weak and disposable income tightens, consumers may reduce meat in their diet or turn to less expensive meat options.”

Not all economists expect U.S. consumer demand to fall off though, even if the U.S. officially enters into a recession.

“Labor income is growing faster than inflation. Most U.S. firms are profitable - at least as of current earnings reports,” said one economist.

Another shared, “I do think consumer demand will be lower in 2025 than it was in 2024. That being said - 2024 consumer expenditures and demand were a lot higher than I anticipated at the beginning of the year. Two indicators that are showing up, and are unsustainable right now, are reducing savings accounts and increasing credit card debt. I think it leads to slower meat demand in 2025, partially due to lower meat availability and partially due to slowing consumer demand. Notice I said ‘slowing’ consumer demand and not ‘declining/negative’. Demand does not have to decline year-over-year to impact meat prices. Slowing can do the same thing.”

The GLP-1 Effect
What could have an even bigger impact on meat demand, and even more so than inflation and a recession, is the use of GLP-1 drugs for weight loss. GLP-1 drugs not only moderate users’ blood sugar levels, but also affect their appetites by suppressing hunger cravings.

“U.S. consumer preference for meat demand is strong, though I would be paying attention to the growing use of GLP-1s as it relates to all agricultural product demand,” one economist responded.

The good news is studies have shown those who use GLP-1 drugs often crave healthier items and often consume more protein versus unhealthy foods.

Starting From a Place of Strength
Forecasting meat demand in 2025 relies on a number of factors. But a positive trend is how consumers, especially the millennial generation, are buying more meat. As PorkBusiness.com reported this week, consumers are buying more meat than ever. In 2024, meat sales hit a record high of $104.6 billion and total pounds sold increased by 2.3%, which was cited in the latest Power of Meat.

More people want meat today, but economists are concerned any economic pain could eat into overall meat demand.

New Warning Signs Agriculture Is In A Recession

Fri, 28 Mar 2025 14:04:53 GMT

ADM and Syngenta are just two of the latest companies to announce layoffs in the agriculture sector. They join a long list of equipment manufacturers, seed and chemical companies and other agribusinesses who are restructuring and laying off employees to weather the current challenges in the ag economy. These are just the latest signs of a glaring reality: the U.S. ag economy is in a recession.

According to Farm Journal’s March Ag Economists’ Monthly Monitor, 62% of ag economists think the row crop side of agriculture is already in a recession. The survey of nearly 70 ag economists from across the country has been tracking the concerns of a recession for months, and as consolidation consumes agriculture, it’s a reminder of the fallout that comes with a downturn.

“Low cotton and wheat prices are a real disaster,” said one economist in the anonymous survey. “Corn and soybean prices continue to move around with some increases ahead of planting lately but they are not at great levels.”
“A recession is a sustained period of economic decline. We may not be able to say the entire agriculture sector is in recession, but the row crop sector has been in economic decline since 2022 and looks like that will continue into 2025,” another economist responded.
“Costs have outpaced revenue for some time now, and recent policy shifts are unlikely to alleviate that pressure,” one economist responded.

Recession concerns in agriculture

(Lindsey Pound )

One economist pointed out net returns are as tight as they have been since 2007, but even then, there are still 38% of economists who don’t think the row crop side of agriculture is in a recession.

“There are folks struggling for sure; however, this is part of the ebbs and flows of commodity agriculture. The difference this time is there was not as much liquidity saved during the good years to assist in the bad years. Therefore people are having to pull back,” one economist said. “ I don’t think the crop sector is in a recession because producer continue to be the dominant buyer of land and crop acreage estimates do not currently anticipate the American producer is going to drastically pull back on planting a crop. If we were in a recession, we would see declining land prices and people would be pulling back on production; neither is happening.”

Growing Concerns Among Ag Lenders
Eroding balance sheets are a concern echoed by agriculture economists, as well as ag lenders across the U.S.

“The end of the year last year was rough, but looking at projected cash flows for ‘25, we see that looking even worse,” Alex McCabe, agribusiness loan officer for CUSB Bank based in Iowa told “U.S. Farm Report.” “It’s unrealized, of course, but definitely looks like it could be a challenge.”

“Most have held together, but working capital has taken a hit,” says Tim Homan, relationship manager for Rabobank. “You’re a lot more confident in your balance sheet when you have good working capital with whatever comes along. It gets a little more nerve racking once that safety net on your balance sheet falls off.”

Concerns About More Consolidation Ahead

Consolidation concerns

(March Ag Economists’ Monthly Monitor )

With the majority of agriculture saying agriculture is currently in a recession, it lends itself to another tough reality: consolidation could continue. Eighty-five percent of economists who responded to the March Ag Economists’ Monthly Monitor said they think the current situation will accelerate consolidation not only on farms but also agribusinesses.

“Farmers who rent land, and some who own land, are not able to generate enough revenue to cover loan obligations and have to liquidate. Those who own land will likely be the ones to weather the economic downturn we are in,” one economist said.
“A sustained period of high costs and low prices will likely result in some farmers going out of business sooner than expected, which may be due to point of financial need or stopping by choice ahead of that. When farm consolidation is accelerated, there are fewer farmers buying inputs. Even those the acres are the same, fewer input retailers are needed to serve the customer base. Also, have greater pressure on the whole industry as big farmers grow,” another economist responded in the anonymous survey.
“Higher cost producers may be leaving the industry because they have to, not because they choose to,” one economist said.
“The agricultural industry has long valued hard work as a fundamental principle of it’s demographic makeup. For a while, government programs and loosening credit conditions have allowed people to receive more for less work. That is changing. I continue to hear conversations with ag service providers that they are focusing on those producers that are willing to put in the business planning themselves and not expecting someone else to do it for them. The process consolidates the sector by removing those that are inefficient and unwilling to do the work,” said another economist.

Another economist in the Ag Economist Monthly Monitor pointed out that when you look out there at available credit, the situation seems okay, but there are some reports out there of lenders having to deny loans.

“I don’t believe it’s widespread, at least not in my area,” said Homan, who is an ag lender in central and northeast Iowa. “There are probably certain areas that have been hit harder by weather and harder by price than what we have.”

No New Farm Bill as a Backstop
Those areas that are particularly struggling are the ones that rely heavily on rice and cotton, and without a farm bill, farmers in the south are worried the financial pain will accelerate in 2025.

Farm Bill timing

(Lindsey Pound )

The March Ag Economists’ Monthly Monitor also asked economists when they think Congress will pass a new farm bill. While just over one-third of economists think there’s still a chance to get a farm bill during the second half of 2025, 42% now say it could be 2027 before Congress passes a new farm bill.

“It’s really tough,” one farmer located north of Lubbock, Texas told Farm Journal. “Honestly, if I could get 50¢ on the dollar, I would sell out today. I’ve never been more disappointed. It’s not just commodity prices, but the fact we don’t have a farm bill that has been a real backstop for so long. We have used insurance way too much, and it’s just not sustainable anymore.”

Your Next Read:
92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

Poll Results: More Than Half of Farmers Say They Don’t Support Trump’s Use of Tariffs

Mon, 24 Mar 2025 18:38:30 GMT

President Donald Trump has been clear since the campaign trail: Tariffs are a tool he would use aggressively during his presidency, and that’s exactly what the president is doing as tariffs have become a bit of a trademark during Trump 2.0 and the first 100 days.

As he prepares to impose more tariffs on April 2, Trump said Monday that he will impose tariffs of 25% on any nation that purchases oil from Venezuela.

“Venezuela has been very hostile to the United States and the freedoms which we espouse. Therefore, any country that purchases oil and/or gas from Venezuela will be forced to pay a tariff of 25% to the United States on any trade they do with our country,” Trump said in a post on Truth Social.

As both targeted and blanket tariffs are applied, retaliatory tariffs on U.S. agriculture are also caught in the middle of the latest trade war. How do farmers feel about this? That’s exactly what we wanted to uncover during the latest AgWeb poll.

The latest AgWeb poll asked, “Do you support President Donald Trump’s use of tariffs as a negotiation strategy?” And even though the majority of farmers say they don’t support Trump’s use of tariffs, according to the recent AgWeb poll, it wasn’t on overwhelming majority.

(AgWeb Poll)

Out of the nearly 3,000 farmers who responded,

54% responded “no”
41% responded “yes”

The poll then followed-up by asking, “Do you believe USDA will compensate farmers for losses if agriculture is affected by a trade war?”

The responses here were much more mixed.

36% responded “no”
34% said “yes”
30% responded they were “unsure”

What are farmers saying in the field? Michelle Jones, a fourth-generation farmer in south central Montana was asked the question about if she supports Trump’s use of tariffs on “AgriTalk” last week.

“No, definitely not,” Jones said. “I don’t think that tariffs are an effective negotiation strategy, and I also don’t think that we’re truly being surgical in how we are applying them.”

Jones says there are cases in history where tariffs are effective, but she says in the majority of those cases, the tariffs are extremely targeted and apply to a certain industry or specific country.

“They were also very short-term whereas now, we’re just using them as basically a blanket approach and then escalating when the president gets angry, and then he rolls them back, and it creates too much uncertainty. It’s just not wildly effective,” Jones also said on “AgriTalk.”

“I agree, they were used before the Phase One deal with China, and they were never dealt with under the Biden administration either,” added April Hemmes, an Iowa farmer, who was also on “AgriTalk” last week. “Now all we’ve done is piss off our neighbors with this, the Canadians, bringing Canada and Mexico into it. And now all consumers are going to have to pay up, not just the farmers.”

However, there are some farmers and those in agriculture who support the president’s heavy use of tariffs. One of those is Bubba Horwitz of Bubba Trading, who focuses on the commodity markets.

“I think it’s a great tool to use,” Horwitz said on “AgriTalk.” “I think you’ve seen it with Canada and Mexico to get things that he wanted to get done. And certainly, you can bargain with those tariffs, you can do whatever you want. I think it’s a great negotiating tool, and it certainly can put pressure because remember one thing, the United States of America could stand alone. We could be an island without anybody. We don’t need anybody else to survive, whereas other countries and nations do need us to survive. We could be totally an island and exist perfectly well without the help of any other country in the world.”

Secretary Rollins Defends Trump’s Use of Tariffs
During a recent interview with Fox News’ Maria Bartiromo, Agriculture Secretary Brooke Rollins defended the president’s use of tariffs, also saying he’s holding Canada accountable.

“This president’s vision of tariffs being such an important part of his toolkit, as he begins to realign the economy to put America first, to put our men and women, our families first. Everybody knows, and when they voted in November of 2024, they knew that’s what they were voting for. And so as we see the president begin to roll out, as we see him hold accountable Canada with their 250 % tariffs on our dairy products, as they see him hold accountable, Mexico, China, all these countries where we have a 5 % on our end when our products go out. They’ve got 15 %,so three times, this is on average on their end when their products come in. It’s not fair. And it’s got to be equalized as we move toward more free trade,” said Rollins.

Rollins pointed out the president has been very clear that there will be an interim period where the economy readjusts.

“Real transformation takes these harder decisions. And no one’s willing to do that, except now President Trump is,” Rollins said during the interview. “So obviously 100 % behind it, I am talking to farmers every single day. They know that the president has their back. They know and are prepared for potentially, you know, an interim period as we move toward what the president has said is the greatest age of prosperity not just for all Americans, But for our farmers in our ranchers as well.”

Ag Economists are Concerned About Tariffs and Impact Long Term
Farm Journal asked a similar question regarding using tariffs to negotiate in the March Ag Economists’ Monthly Monitor, and the survey found an overwhelming majority of economists are concerned about the impacts long term.

Ninety-two percent of economists think Trump’s strategy of using tariffs as a negotiating tool won’t benefit U.S. agriculture in the long run.

“Lost trade and lost reliability in a key sector for aggregate ag demand will hurt agriculture more than any specific market gains made from negotiations or reciprocal trade battles,” one economist said.
“Tariffs not only have a negative impact the short run, they also have negative impacts in the long run,” said an economist in the anonymous survey.
“Lost market share is extremely difficult to regain, especially when the U.S. becomes known as an unreliable market partner,” another economist noted.
“I responded yes, although I believe there are scenarios where this is harmful and scenarios where it could be beneficial,” said another economist. “For it to be beneficial depends on it being short lived and resulting in trade initiatives with market access or purchase commitments. And in the meantime, action is taken quickly related to President Trump’s post to offset trade loss with increased domestic use such as removing dated rules that limit ethanol blends, renewing or creating biofuels production incentives, and adding SAF as a mandated fuel.”

Market Facilitation Program 2.0?
If agriculture is caught in the middle of another trade war, the March Ag Economists’ Monthly Monitor wanted to know if economists think USDA will compensate farmers for their losses again, similar to what the previous Trump administration did with Market Facilitation Program (MFP) payments.

Even though Secretary of Agriculture Brooke Rollins has promised to make farmers whole through another trade war, economists are concerned about available funding.

Seventy-seven percent of economists think USDA will compensate farmers, but 23% don’t think so.

Here’s what economists in the March Ag Economists’ Monthly Monitor had to say.

“Congress might be the limiting factor,” one economist said.
“They will want to do so, but their ability to do so may be limited. The failure to include replenishment of the Commodity Credit Corporation’s borrowing authority in the continuing resolution limits available CCC funds, and other options may also be limited in potential scope,” another respondent shared.
“Yes, I expect more trade compensation because of the political sensitivity of ag and the administrative commitments already to doing so. I don’t know what and how much it might be, particularly if we are entering a new era of budget austerity or at least stated goals of budget restraint,” responded one economist.
“Depends on who is calling the shots Trump or Musk,” another economist noted. “Trump might want to because farmers voted for him. But will he spend the money? He probably would. But, who else are farmers going to vote for? Is Trump running again?”
“Tariffs are not good revenue creators — they are a poorly targeted tax on U.S. consumers. If the federal government believes it will raise revenue from these tariffs like it claims, it is hard for me to believe that they will turn around and give that limited revenue back to the people it impacted the most,” said an economist in the anonymous survey.

No matter what happens with the upcoming April 2 tariff deadline, economists agree that what happens with trade and tariffs will likely be the top factor that impacts agriculture over the next 12 months.

In a recent interview on “AgriTalk,” hear where Sen. Chuck Grassley, R-Iowa, stands on fair trade versus free trade.

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

Fri, 21 Mar 2025 14:47:57 GMT

President Donald Trump hasn’t been shy about using tariffs as a negotiating tool. As he cracks down on fentanyl and illegal border crossings, he’s also pushing to restore what he calls fairness in U.S. trade relationships and countering non-reciprocal trading arrangements.

The reality for agriculture is the U.S. agricultural trade deficit hit a record in 2024 as imports soared, and Trump says he wants to reverse the trend.

According to the Trump administration, when it comes to tariffs and the impact on the overall economy, long-term gain will be worth the short-term pain. However, when it comes to agriculture, ag economists survyed in the March Ag Economists’ Monthly Monitor don’t agree.

Ninety-two percent of economists think Trump’s strategy of using tariffs as a negotiating tool won’t benefit U.S. agriculture in the long run.

Here are some of those economists’ comments from the most recent Farm Journal Ag Economists’ Monthly Monitor survey.

“Food as a weapon doesn’t have a successful track record, see Jimmy Carter and the 1980s,” responded one economist in the anonymous survey. “It’s not a guarantee as it’s like playing Russian roulette; you might ‘win,’ but the risks are huge.”
“Farm Journal readers should learn about the long-term consequences of Smoot-Hawley. It wasn’t just about the economic costs — it was also about the relational damage between trading partners. I have a hard time believing we will rebuild these relationships any time in the foreseeable future,” another economist said.
“It depends on whether tariffs are used as a negotiating tool with the ultimate goal of reducing trade barriers, or whether they instead result in a world with higher barriers. The president’s emphasis on tariffs as a way to raise revenue suggests tariffs and their consequences may persist,” was another economist’s response in the Monthly Monitor.

However, one economist wasn’t as certain, saying, “For it to be beneficial depends on it being short lived and resulting in trade initiatives with market access or purchase commitments. And in the meantime, action is taken quickly related to Trump’s post to offset trade loss with increased domestic use such as removing dated rules that limit ethanol blends, renewing or creating biofuels production incentives, and adding SAF as a mandated fuel.”

Trade War or No Trade War?
What an overwhelming number of agricultural economists do agree on is that the U.S. is in the midst of another trade war. Ninety-two percent of economists say a trade war is already here, while only 8% responded no.

“I don’t think anyone is arguing with the notion that we are in another ‘trade war,’” one economist said. “This one is far bigger and far more consequential than the last one we were in.”

“It seems more like a trade cold war,” another economist responded. “The situation is ever-changing, and it is hard for buyers, markets and producers to anticipate reality and effect. The threat of tariffs is almost as effective as a tariff.”

As agriculture tries to navigate the turbulence and shocks of another trade war, the ultimate question is: Who wins in a trade war? According to Romel Mostafa, professor of business, economics and public policy for the Ivey Business School in London, Ontario, it’s neither the U.S. or Canada.

“If we think about U.S. and Canada, we both lose,” Mostafa says. “The way our markets are integrated, both from the input side as well as the product side, any tariff really increases cost of production for our farmers all the way to food on the table. What then happens, essentially, some of our products are going to be less competitive in major markets than where we compete. Who then benefits? Perhaps Brazil, Russia or other countries.”

Other agricultural economists agree: If you’re looking at the trade war between the U.S. and Canada or the U.S. and China, it’s not the U.S. who wins, it’s ultimately one of the United States’ biggest competitors: Brazil.

The Ag Economists’ Monthly Monitor asked, “In the next 10 years, which country ultimately benefits the most from the current trade turbulence?” Seventy-three percent of economists think it’s Brazil, and 18% said China.

This Trade War Could Be Worse Than the Last time
Of the agricultural economists surveyed, 69% say they don’t think a trade war today would have the same impact it did 2018 through 2020. Instead, most think it will be worse.

“The trade war in 2018/19 also had the African swine fever in China. Because of ASF, they did not need the soybeans anyway. It will be hard to figure out what impacted the U.S. markets/prices more, but the market reaction should not be as great this time,” said one economist in the monthly survey.

Ag Econoimsts’ Monthly Monitor

(Lindsey Pound)

“It would be a bigger impact,” another economist said. “The first round of trade wars in agriculture were largely used as a wedge for negotiation or renegotiation of agreements that provided improved access and growth opportunities for ag trade. This round seems to be championed based on reshaping the entire trading system, a system that U.S. agriculture largely benefited from over time.”

“There appears to be less willingness by the U.S. taxpayer to provide financial assistance to agricultural producers. That is not to say that financial assistance is absent this go around, but I do believe it increases the uncomfortable situation for producers who largely support less government spending,” one of the respondents shared.

However, other economists think it could have a similar impact, saying the same commodities will be impacted.

Even talk of tariffs is enough to move the markets, as some analysts argue the commodity markets have been ignoring fundamentals, instead trading headlines recently.

The Potential Economic Hit to Ag
The American Farm Bureau (AFBF) economists recently took a deeper dive into the possible impact of reciprocal tariffs. AFBF economists say of the top 20 U.S. agricultural products currently being targeted by Canada, for a total of $5.8 billion, commodities such as juice, coffee and chocolate are hardest hit, along with wine, fresh fruit, dairy products, poultry and rice.

Canada’s retaliatory tariffs

(AFBF)

China’s retaliatory tariffs

(AFBF )

When it comes to China, Beijing has specifically targeted 15 products including beef, cotton, grain sorghum, pork, corn and dairy along with fresh fruit. Economists say while it’s too early to measure the full impact of the tariffs on U.S. agriculture, they believe it will certainly decrease demand for U.S. products in Canada and China.

Market Facilitation Program 2.0?
If agriculture is caught in the middle of another trade war, the March Ag Economists’ Monthly Monitor wanted to know if economists think USDA will compensate farmers for their losses again, similar to what the previous Trump administration did with Market Facilitation Program (MFP) payments.

March Ag Economists’ Monthly Monitor

(Lindsey Pound)

Even though Secretary of Agriculture Brooke Rollins has promised to make farmers whole through another trade war, economists are concerned about available funding. Seventy-seven percent of economists think USDA will compensate farmers, but 23% don’t think so.

“Congress might be the limiting factor,” one economist said.

“They will want to do so, but their ability to do so may be limited. The failure to include replenishment of the Commodity Credit Corporation’s borrowing authority in the continuing resolution limits available CCC funds, and other options may also be limited in potential scope,” another respondent shared.

“The political dynamics appear to be similar,” said another economist. “Amounts are however likely to be less, maybe substantially less, due to the general policy initiative to reduce government spending.”

The Secretary of Agriculture has come out and said they will use these tools if it becomes necessary.

10 Charts to Explain What's Shaping the Ag Economy to Start 2025

Mon, 10 Feb 2025 15:03:32 GMT

Last year’s initial net farm income forecast showed the two largest consecutive declines in net farm income history, the picture seems to be improving in 2025.

According to USDA’s Economic Research Service, the first net farm income forecast of the year shows net farm income is expected to reach $180.1 billion, up $41 billion from 2024, while net cash farm income is projected to hit $193.7 billion, a $34.5 billion increase. A staggering 34.5% increase in government payments, from $9.3 billion in 2024 to $42.4 billion in 2025, is the key factor behind the income boost.

Yet, when you look at the specifics, economists continue to be more bullish when it comes to livestock, specifically cattle.

Farm Journal’s January Ag Economists’ Monthly Monitor

(Lindsey Pound)

According to economists in the January Ag Economists’ Monthly Monitor survey, shrinking supplies and strong demand are the two major drivers of the historic run in cattle prices. And that’s why out of the 10 major commodities, economists are most bullish on cattle in 2025.

Recession in Row Crops?

Even with the expectation for improved net farm income, with a 34% increase in expected government payments, ag economists are still concerned about the current state of the ag economy for the row crop sector. Sixty-four percent of economists say the row crop side of agriculture is currently in a recession, 36% say it’s not.

Farm Journal’s January Ag Economists’ Monthly Monitor

(Lindsey Pound)

“A modest recovery in prices for some major crops has slightly improved the current state of the farm economy, and the outlook has brightened somewhat as well,” said one economist in the anonymous Monthly Monitor survey. “The prospect of economic assistance and disaster payments also improves the farm income outlook in 2025.”

“For row crop profitability, corn and soybean prices have seen some improvement recently offering some decent pricing opportunities, but some farmers may not have any old crop to sell now to take advantage of improved prices,” said another economist. “Without additional price improvement, there is still poor profitability outlook for new crop. But when you look at demand opportunities, there are a lot of unknowns about the future demand for trade and biofuels in the Trump administration. It could be positive or negative and will likely be impactful over the next 12 months.”

Those who argue agriculture is not in a recession, say it’s because:

$31 billion in direct payments and disaster aid passed by Congress in December.
The fact strong land values and rents have slowed their increases yet have not seen any significant declines

“We are not in a recession when farmers were still paying off pre-bought 2025 input expenses in 2024 to minimize 2024 tax bills, nor when land values and cash rents are holding as well as they are. There are producers that are over extended and all crop producers are making adjustments, but these are the ebbs and flows that the agricultural industry has managed for decades,” one economist said. “The expectations are changing to expect downside risk, and so people aren’t planning for the downside, and those that do are being penalized.”

Consolidation Concerns

Farm Journal’s January Ag Economists’ Monthly Monitor

(Lindsey Pound)

With concerns about a recession, the survey then asked economists if the current environment will accelerate consolidation, and an overwhelming number of economists, 86%, said yes.

Those economists who think it will force consolidation said:

“Probably mostly in the related industries as they try to consolidate to protect profit margins as producers maybe pull back on input choices or become much more price-conscious.”
“Farmers will think about exiting earlier, debt/income ratio”
“It’s only the most cost-efficient survive.”
“More people are exiting because they have little choice. Much consolidation would be happening even if the market situation were better.”
“Low margin producers will always be squeezed out by these type of times.”
“The ability of larger producers to spread costs over a larger number of acres.”
“Semi-retired farmers tend to call it quits during a down cycle. Farms that rent a substantial portion of their acreage find it increasingly difficult to sustain high cash rents.”

However, other economists argue the downturn hasn’t lasted long enough to force consolidation.

“If the current situation persists for several years, then yes. At this point, it’s too early and not severe enough,” one economist said.

The Main Factors Driving the Ag Economy

When asked to list the main factors driving the health of the ag economy right now, ag economists said:

Poor grain prices offset by improving livestock margins
Biofuel policies, tariffs, commodity prices
The potential for a trade war with China
South America’s crop
Ad hoc government payments
Improved grain ending stocks in the U.S.
Lower costs for fuel and interest

Trump’s Priorities and the Impact on Ag

The January Ag Economists’ Monthly Monitor released this week asked which of Trump’s priorities will have the most negative impact on agriculture. Seventy-nine percent said it’s trade and tariffs. Twenty-two percent said border security and deportation.

When asked which of the president’s priorities would have the most positive impact on agriculture, 54% of economists said cutting regulations, and 38% said tax changes.

January Ag Economists’ Monthy Monitor

(Lindsey Pound )

Tariffs on the U.S.'s top three trading partners could have a major impact on agriculture. The January Ag Economists’ Monthly Monitor asked economists which input is most at risk. The top answer was fertilizer.

“From a headline standpoint, it’s probably potash,” says Samuel Taylor, farm inputs analyst, Rabobank. “We get 85% to 90% of our potash from imports from the Canadian market. The residual is made up by Russia and Israel, in principle, with some other markets coming in.”

Ag Economists’ Monthly Monitor

(Lindsey Pound)

Direct Payments to Farmers

As USDA noted in its 2025 net farm income forecast this week, Congress included economic aid for farmers in the continuing resolution (CR) . The “Economic Loss Assistance Program” earmarked $10 billion in direct payments for farmers, which is expected to improve the net farm income picture this year.

Farmers are still waiting for the payments from USDA, but it’s been called a “cash infusion” into the farm sector.

January Ag Economists’ Monthly Montior

(Lindsey Pound )

The January Monthly Monitor asked economists if those payments were needed in agriculture. Sixty-four percent said yes, and 36% said no.

In the survey, of the economists who said the payments were needed, some of the reasons why include:

Land values continue to climb
Input costs will remain elevated and inefficient farmers that overleveraged themselves the past couple years will remain in business
Delays producers cutting fixed costs, especially cash rents

But not all economists agree the payments were needed, warning of some unintended consequences, including prolonging what some economists argue are adjustments needed in the industry. In the survey, economists said:

“I think there could be some pushback when the longer-term farm bill comes up for authorization with budget hawks pointing to the $10 billion as a down payment of sorts.”
“This will slow some adjustments that arguably are needed. For example, land rents are generally higher than can be justified by current market returns. Getting approval for another round of payments in 2025 is far from certain, so unless markets improve considerably, there could be a renewed financial squeeze in 2026.”

Future of the Farm Bill

Farm Journal’s January Ag Economists’ Monthly Monitor

(Lindsey Pound)

The Senate and House leadership for both Ag Committees have made clear they want to see a farm bill early this year. Fifty-seven percent of economists think it will be the second half of this year before Congress passes a new farm bill. Twenty-nine percent say 2026, and 14% of economists still think Congress will pass a new farm bill the first half of 2025.

45Z and Impact on Farmers

In the Biden administration’s final days in office, USDA finally released an interim rule establishes guidelines for quantifying, reporting and verifying the greenhouse gas (GHG) emissions associated with the production of biofuel feedstock commodity crops grown in the U.S.

The Treasury Department and Internal Revenue Service (IRS) also issued preliminary guidance on the 45Z tax credit in January, which was created by the 2022 Inflation Reduction Act (IRA/Climate Act), including the addition of sorghum as a crop that could qualify as a feedstock for a fuel that can claim the 45Z credit if certain climate smart agriculture (CSA) practices are followed.

The Treasury also released a notice that provides the emissions rate table for the 45Z credit.

Farm Journal’s January Ag Economists’ Monthly Monitor

(Lindsey Pound)

The January Monthly Monitor asked if the rule becomes final, when it could impact farmers and ethanol producers. Fifty-five percent said it could impact them as soon as the second half of this year.

Trump’s Key Cabinet Picks

Rollins and RJK Jr. in Farm Country

(Farm Journal )

The future of 45Z is now up to the Trump administration.

Late last month, Brooke Rollins, Trump’s nominee for Agriculture Secretary , powered through her confirmation hearing in front of the Senate Ag Committee . The Senate still needs to vote on her confirmation, but no timeline has been given on when that vote will happen yet.

Eighty percent of economists in the January Ag Economists’ Monthly say if confirmed, Rollins is a positive pick for U.S. agriculture.

“Rollins knows ag and has Trump’s ear,” said one economist.
“Her close connection the president and reasons outlined in the letter sent by 427 ag organizations and businesses on Jan. 15,” said another economist.

Twenty percent of economists say Rollins wouldn’t be positive for U.S. agriculture.

One economist said, “USDA focused heavily on under-served producers during the Vilsack era and my sense is that producers wanted the Secretary to come from a production ag view; whereas Rollins comes at it more from an overall domestic policy view. Also, I feel the administration isn’t helping her out with the Deputy Secretary nomination. Producers don’t see themselves in the upcoming USDA leadership.”

However, economists aren’t as confident that Robert F. Kennedy Jr., Trump’s pick to lead the Department of Health and Human Services, will be a positive for U.S. agriculture. Ninety percent of the economists surveyed said no.

One economist said, “His disrespect for science is troubling.” Another economist weighed in by saying, “His positions on crop protection will be an interesting storyline to watch early in 2025.”

However, not all economists think RFK Jr. would be bad for agriculture. In fact, one economist thinks he could actually restore confidence in agriculture.

“Improving health outcomes, even if over a longer time period, should improve the consumer opinion of agriculture and be a net gain overall,” one economist said in the anonymous survey.

Do Tariffs Work? Leading Ag Economists Weigh In

Mon, 03 Feb 2025 17:00:00 GMT

Tariffs are a tool used by President Donald Trump during both his terms. But do they work? Not even ag economists are in alignment, as the answer seems to be: It depends.

This past weekend, Trump signed three executive orders for tariffs , the first time a president has used powers granted under the International Emergency Economic Powers Act of 1977. The orders also include retaliation clauses that would ramp up tariffs if the countries respond in kind. Trump cut the levy on imports of Canadian energy to 10%.

By Monday morning, Trump had agreed to delay tariffs on goods from Mexico for one month to allow more time for negotiations. The agreement happened just hours before the tariffs were set to take effect.

President Claudia Sheinbaum said U.S. tariffs against Mexico will be delayed for one month after a conversation with Trump on Monday. Trump then confirmed the news on Truth Social.

Which Input Could Be Impacted Most by Tariffs?

Tariffs on the U.S.'s top three trading partners could have a major impact on agriculture. The January Ag Economists’ Monthly Monitor asked economists which input is most at risk. The top answer was fertilizer.

Ag Economists’ Monthly Monitor

(Lindsey Pound)

“From a headline standpoint, it’s probably potash,” says Samuel Taylor, farm inputs analyst, Rabobank. “We get 85% to 90% of our potash from imports from the Canadian market. The residual is made up by Russia and Israel, in principle, with some other markets coming in.”

One day after Trump announced he would move ahead with planned tariffs, Prime Minister Justin Trudeau stated tariffs targeting $30 billion in American products, such as alcohol, produce, household goods and industrial materials, will roll out in two phases starting Feb. 4, the same day the U.S. tariffs are set to begin.

The tariffs on the other $125 billion worth of goods will come in 21 days to allow impacted Canadian companies to adjust their supply chains. Trudeau emphasized Canada’s response would be “strong but appropriate,” while also considering non-tariff measures such as restrictions on critical minerals.

Do Tariffs Work?

With tariffs and a potential trade war brewing that begs the question: Do tariffs work?

It’s something Farm Journal asked the nearly 70 ag economists part of the Farm Journal Ag Economists’ Monthly Monitor. The survey asked economists: “Do tariffs work in trade policy?” Economists views were mixed:

“Tariffs can work in trade policy — that’s why nations continue to use them. The complex part that extends beyond the tariff action is potential long-term repercussions that can result from trade flow changes.”
“In limited cases, typically only if they result in a policy response in the targeted country. Much of the time, tariffs are like cutting off one’s nose to spite one’s face.”
“Tariffs provide short-term gains but have always failed relative to free trade in the long term.”
“Absolutely, when properly applied.”
“Not over the long term. They tend to affect who gets to supply different markets around the world.”

The Ag Economists’ Monthly Monitor also asked: “When tariffs are used as a ‘tool’ in trade, who pays the tariff?” Not all economists were aligned on that answer either, saying sometimes it’s farmers and consumers, but it can also be the exporting countries.

“When the U.S. imposes tariffs on imports, importers in the U.S. pay taxes to the U.S. government on their purchases from abroad. When another nation imposes tariffs, importers in that nation pay import taxes to their government on their purchases from abroad. Often, when a tariff is implemented, another nation retaliates, and you end up with importers in both nations paying the price on whatever products the tariffs apply toward.”
“If an importing country places a tariff on the exporting country, producers in the exporting country and consumers in the importing country both lose (i.e., receive lower and higher prices, respectively). Conversely, producers in the importing country and consumers in the exporting country win (i.e., receive higher and lower prices, respectively).”
“In the short run, consumers who purchase goods with a tariff might see higher prices if the tariff is not absorbed elsewhere. In the long run, the tariff might result in changes to the supply chain that result in higher prices but also create other economic opportunities in America (e.g. reshoring of domestic manufacturing).”
“The correct economist answer is: It depends. Tariffs drive a wedge between prices in the exporting country and in the importing country. It depends on the circumstances of particular markets and how much is reflected in higher prices in the importing country and reduced prices in the exporting country.”
“Both the exporting nation and the importing consumer pay some portion of the tariff depending on who has more flexibility to adjust to trade barrier. If exporting countries can easily switch to supplying other markets, they won’t have to ‘pay.’ If consumers can easily find cheap substitute goods, they won’t have to pay.”

10 Understated Things Economists Say Could Impact Agriculture in the New Year

Thu, 26 Dec 2024 16:29:47 GMT

This past year was definitely full of surprises, but there were also happenings in agriculture that economists warned about at the end of 2023.

The bleak outlook for commodity prices, along with elevated interest rates, created a downturn in the ag economy, which is something many economists warned would happen. It’s the speed of which margins crumbled that might have been the bigger surprise.

The latest Ag Economists’ Monthly Monitor asked economists if the U.S. was either in a recession or on the brink of one. The majority of ag economists say U.S. agriculture is ending the year in a recession.

56% of ag economists responded by saying agriculture is currently in a recession, which is up from the 53% who responded that way in October.
81% of economists surveyed said the U.S ag economy is on the brink of a recession, which is a significant jump from the 56% of economists who responded that way in the October survey.

One occurrence that wasn’t on anyone’s radar in 2023: H5N1. What was first thought to be a mystery illness impacting dairy herds in Texas was later confirmed as Highly Pathogenic Avian Flu, the first time the disease was detected in mammals.

At the end of 2024, what are economists watching in 2025? In Farm Journal’s latest Ag Economists’ Monthly Monitor, we asked economists: “What’s the one factor impacting the ag economy that’s not being talked about or covered by the media enough right now?”

From trade to deregulation plus numerous unknowns in a new administration, economists have no shortage of issues they’re watching in the new year.

Here’s What Economists Are Saying:

“The media seems consumed with the negatives of a Trump administration/Republican trifecta. It’s certainly good to be aware of the challenges with any political transition, but more forward thinking on what is positive, would be helpful: the outlook for taxes, biofuels policy, trade deals with agriculture included, deregulation all seem to be potential positives we could be talking about more.”
“Prospective tariff war is being downplayed, despite published research measuring expected range of damage.”
“Farmer attitudes toward alternative land use: CRP, solar and other forms to help diversify incomes.”
“Policy uncertainty is high right now. Will tariffs be imposed and if so, what will be the reaction of other countries? Will the new Administration take regulatory actions that favor or hurt the biofuel industry? What will be the outcome of debates over tax and budgetary policy? Will economic assistance to the farm sector be approved during the lame duck session or in early 2025? What about a new farm bill? Many people are making assumptions about how these questions will be answered, but we don’t know.”
“Farm income varies greatly by region. While we often focus on the Midwest and the financial health of that region, it is also important to notice that regions in the southern U.S. are really struggling.” It is also important to watch what production adjustments producers make to cope with today’s tighter operating margins?
“Could federal budget cuts/austerity dramatically change/reduce the federal farm income safety net?”
“Cash rent prices staying constant during a downturn in crop prices.”
“Let’s be clear — the clean fuels tax credit goes to the fuel producer, not the farmer. It enables market access into the biofuels market for the farm economy, but the ability for the farm economy to capitalize upon it is hamstrung by credit levels that have incentivized large inflows of foreign feedstocks at the expense of literally homegrown feedstocks like SBO.”
“The Brazil real is depreciating, which eventually leads to more U.S. competition.”
“China, Europe, Mexico and others know what to expect out of Trump. They’ve seen it before. Everyone is discounting the possibility that Trump’s tariff threat could result in some pre-emptive trade agreements that benefit us here in the states. The U.S. is the biggest buyer of consumer goods in the world. They can’t afford to cut us off. Note that I said consumer goods, not commodities.”

Your Next Read — Economic Loss Assistance Program Payments Passed by Congress: Here’s What Farmers Need to Know

Majority of Ag Economists say U.S. Agriculture is Ending the Year in a Recession

Mon, 16 Dec 2024 19:20:08 GMT

A sharp drop in net farm income among row crop farmers has held a hefty grip on the ag economy this year. 2025 isn’t forecast to be much better, with margins expected to be in the red again for all major row crops. The high input and high interest rate environment, coupled with low commodity prices, is a recipe that could also mean more consolidation in agriculture in 2025.

The eroding health of the overall farm economy was the emphasis of the latest Farm Journal Ag Economists’ Monthly Monitor, which is a survey of nearly 70 leading agricultural economists from across the country.

When asked if agriculture is either currently in a recession or on the brink of one:

56% of ag economists responded by saying agriculture is currently in a recession, which is up from the 53% who responded that way in October.
And 81% of economists surveyed said the U.S ag economy is on the brink of a recession, which is a significant jump from the 56% of economists who responded that way in the October survey.

One of the main reasons more economists didn’t respond that ag is already in a recession, is the fact the livestock sector is doing better than expected at the beginning of the year.

Farm Journal asked economists to weigh in on whether they thought agriculture is currently in a recession. Economists in the anonymous survey said:

“A recession is a sustained period of economic decline. We may not be able to say the entire agriculture sector is in recession, but the row crop sector has been in economic decline since 2022 and looks like that will continue into 2025.”
“I would argue we are largely already there...incomes have already fallen...used machinery values have fallen...but there is room for more decline from the livestock sector should those prices turn lower. Land values holding up are probably the one thing in my opinion that has yet to give, and that MAY only be a matter of time. “
“Farm income has already dropped considerably from the 2022 peak, and the crop sector is seriously affected. There are many downside risks in 2025 that could make a difficult situation worse.”
“I believe we are already in a recession. Farm income is and has been declining, and I don’t see a reversal of this in the next 12 to 24 months given policy uncertainty, surplus inventories, large ex-U.S. production, and likely declines in export viability.”
“Higher interest rates are making it hard to manage debt that is outstanding and likely to come with next year.”
“Some producers have not built an adequate asset base to weather these low returns and will be forced to change their business in an attempt to survive.”
“Negative profit margins relative to recent years are driving capital investment and land prices lower, reducing the financial position of agriculture amid lower income.”
“Specifically for the row crop sector, we are looking at another year of negative returns and that really wears on liquidity and puts pressure on longer term solvency.”
“Prices are too low to pay input costs and create a profit. At the moment, producers are fighting to break even.”

However, not all economists agree agriculture is in a recession. One economist points to land prices as the reason why.

“It is hard to say that agriculture is facing a recession when land prices are holding the way they are,” said one economist in the anonymous survey. “It appears that (many) full-time, commercial-scale row crop producers have used their working capital on recent land purchases and have nothing left to withstand a financial shortfall. Frankly, the current conversation about passing economic relief will go to those that have overextended their means to buy land the last couple years.”

Concerns About Consolidation

Another year of negative margins could create more consolidation in the row crop sector, according to economists. The latest Ag Economists’ Monthly Monitor found 94% of economists think the current environment of low commodity prices and high input costs will accelerate consolidation in row crop operations and allied industries .

“Some farms are expanding while others are leaving the industry. It is interesting to compare the percentage of U.S. businesses that go broke in the first 10 years to the percentage of U.S. farms that go broke in the first 10 years. The role of government intervention has really limited the realized risk in agriculture and, as a result, lowered the ability for young producers and ranchers to get into agriculture and increased the consolidation of land.”
“A sustained period of high costs and low prices will likely result in some farmers going out of business sooner than expected, which may be due to point of financial need or stopping by choice ahead of that. When farm consolidation is accelerated, there are fewer farmers buying inputs. Even if the acres are the same, fewer input retailer are needed to serve the customer base. Also, we have greater pressure on the whole industry as big farmers grow.”
“Low-cost producers, and those without any land rents or borrowing costs, are better equipped to weather a downturn in the farm economy.”
“Average margins are typically higher for larger farms. They also have more ability to borrow money.”
“The only way to survive is to increase quantity (number of bushels) and low margins.”
“Those who have managed well, kept production costs low, and have responsible cash balances should be in a good position to expand, absorbing those who made poor choices or experienced bad luck. Lending and federal disaster payments could delay this some. So, the magnitude of this is uncertain.”
“People will always be entering and leaving the industry, but when returns are low, more people leave because they have to, rather than because they want to.”
“The last time we were at the start of a commodity down cycle in 2014/15, it presaged a wave of consolidation in input developers over the next several years, such as Bayer/Monsanto; Dow/Dupont; ChemChina/Syngenta; Mosaic/Potash.”
“Operations and allied industries will expand to find additional economies of scale, one of the few options on the table to help with the tough financial situation.”

What to Watch in the Ag Economy in 2025

The health of the farm economy into the new year relies on a number of factors. What happens in South America with crop production will have a major impact on commodity prices in the U.S. However, economists said there are other factors to watch, including what happens with the incoming Trump administration.

Nov./Dec. Ag Economists’ Monthly Monitor

(Lindsey Pound)

When asked, “What are the two most important factors driving agriculture’s economic health today as well as in12 months,” economists said:

“South American production and input costs.”
“Farm financial conditions: there’s been a little price improvement recently, but still high costs mean 2025 is likely another year of negative margins for row crop producers. 2. Relative global competitiveness: We continue to see cropland area expansion in Brazil and, at the same time, they have a more favorable biofuels policy and are expanding trade agreements.”
“Congressional efforts to deliver economic and natural disaster aid, and U.S. agricultural export markets.”
“Declining commodity prices and associated margin squeeze.”
“As a sector as a whole, the livestock sector returns are important to the overall health in the short run. In 12 months, how the markets adjust (input prices, crop prices, and cash management/debt levels).”
“Demand side: uncertainty about renewable energy policy and potential international market loss through trade disputes. Production side: outlook for labor availability, given political rhetoric. Overall margin compression on lower commodity prices (likely larger Brazilian production forthcoming) and sustained high interest rates.”
“If 2018 is any indication, in 12 months we are likely to see adverse effects of tariffs, as well as immigration policy changes.”

Future of the Farm Bill

The Ag Economists’ Monthly Monitor also asked economists to weigh in on when they think Congress will pass a new farm bill, as well as if Congress votes on an extension this year, is it necessary to raise reference prices for producers.

Nov./Dec. Ag Economists’ Monthly Monitor

(Lindsey Pound)

Nov/Dec Ag Economists’ Monthly Monitor

(Lindsey Pound)

See previous results from Farm Journal’s Ag Economists’ Monthly Monitor.

How Higher Interest Rates Could Impact Farmers in 2025

Tue, 05 Nov 2024 17:49:00 GMT

The Federal Reserve is expected to cut interest rates this week, which would mark the second time this year. However, the Fed’s decision to cut the benchmark interest rate last month is only providing relief on short-term rates. The mid- and long-term rates have actually gone up, not down.

“The market trades the two-year break-even inflation rate — the expectation of what inflation’s going to average over the next two years,” says Arlan Suderman, chief commodities economist with StoneX Group. “In the last six weeks or so, we have seen it jump a full percentage point. That is a significant short-term jump, saying that reinflation fears are coming back in a hurry.”

Suderman points out the Fed can influence mid- and long-term rates, but the agency can’t control them. Concerns about inflation are pushing those rates back up again.

“That could all change over the next couple of weeks, or it could be reinvigorated,” Suderman says. “Longer term, what I’m looking for is a return to the interest rates we saw in the ‘90s and early 2000. But I think there’s going to be a lot of volatility in getting there.”

Real Rates Move Higher

Krista Swanson, lead economist for National Corn Growers Association, says the day before the September FOMC meeting the 10-year Treasury was at 3.63%, but today it’s 4.21%.

“There are a number of reasons the 10-year Treasury is rising,” she says. “Among those, are market expectations for the Fed to slow rate cuts as recent macro data has reduced recession fears. Investor moves are showing growing confidence in the U.S. economy. In other words, the market is driving real interest rates higher, despite the lower federal funds target range. The federal funds rate is the interest rate that banks charge each other to borrow funds overnight.”

Like Suderman, Swanson says the Federal Reserve can influence the interest rates farmers/consumers/businesses pay on loans through changes in the Fed Funds Rate. However, the amount charged by the lender to the customer includes a spread (their profit) and depends on borrower specific factors such as credit score, size of loan, type of loan, loan term, etc.

Interest Rates

(NCGA)

The Interest Rate Wildcard and Impact on the Ag Economy

When you look at what could impact both livestock and row crop producers the next six months, a major wild card is interest rates. The October Ag Economists’ Monthly Monitor asked economists how much farm interest rates need to fall to find economic stability for farmers, and 46% said 2%.

The Monthly Monitor also asked economists to list topics or stories that could impact agriculture over the next 12 months but aren’t currently getting covered by the media enough. Some economists say it’s interest rates.

“I think one of the things is the return to higher interest rates, which is what we’re seeing play out and how that could negatively impact agriculture at a time when it’s struggling from depressed prices and lingering high input costs,” Suderman says. “As higher interest rates continue that impacts not only your operation costs, your operating note expenses, etc., but it also increases the cost of storing grain, whether you could pay off loans or put that money into interest. All that has an impact on your marketing and marketing strategies.”

Dr. Vince Malanga on U.S. Economy

Dr. Vince Malanga, president of LaSalle Economics, signals future economic stability might be threatened by conflicting survey data, recent steepening of the yield curve and a federal deficit near 7% of GDP.

The real GDP grew at a 2.8% rate during the summer, with inflation at 1.8%, signaling strong corporate profits if sustained, Malanga says. Federal spending and consumption were key drivers, he adds, while trade and construction underperformed. Although business investment was stable, external events such as hurricanes and strikes had an impact.

Malanga also points out long-term rates might be rising due to investor concerns over fiscal sustainability, potentially signaling discontent with growing federal red ink. Housing markets showed signs of a recovery but were negatively impacted by rising rates.

Both presidential candidates have not focused on addressing the deficit, favoring tax cuts and subsidies instead, Malanga adds. The Federal Reserve, which has traditionally stayed clear of fiscal policies, might need to step in, he believes, with Chair Powell likely considering whether to counter deficits or monetize debt.

Malanga’s bottom line: The sustainability of the current growth and low inflation relies on fiscal responsibility and economic adjustments moving forward.

Election Impact on Ag

Ahead of the election, the Ag Economists’ Monthly Monitor asked economists which presidential candidate will be more effective at taming inflation. Fifty-three percent said Donald Trump.

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

A Possible Recession Still Hangs Over the Ag Economy, But Positive Shifts Are Starting to Surface

Fri, 01 Nov 2024 23:19:58 GMT

In September, 75 percent of ag economists warned of an impending agricultural recession. October brought slight optimism to the Ag Economists’ Monthly Monitor, attributed to rising U.S. corn export demand and forecasts about cattle herd rebuilding. Yet, economists remain cautious about the potential impact of the upcoming election.

Harvest is winding down across the Midwest, and some farmers saw a record harvest pace in 2024. Harvest is typically the time of year the market sets harvest lows, but this year, commodities, like corn and wheat, came to life.

“I think over the last month, we’ve seen a little bit of a rebound or stabilization of prices, if you will. Some of that’s simply been fund short covering that is supported, some of it is a little better long-term picture for wheat and for corn, although for soybeans, it’s still looking somewhat bleak long-term,” said Arlan Suderman, chief commodities economist with StoneX Group.

The latest Ag Economists’ Monthly Monitor, which is a survey of nearly 70 ag economists and conducted by Farm Jounal each month, reflected that with short-term sentiments among economists seeing a slight improvement, but a bigger jump when asked to compare them to last year.

“We could have told you two to three years ago that, after a period of high prices, eventually we were going to have a recovery in production and that was going to suppress prices probably more than input costs. We knew that. I think when you take into account expectations heading into the year, has it deteriorated more than expectations? Probably not. We just know that we’re worse off today than where we were,” said Ben Brown, an agricultural economist with the University of Missouri.

Each month, the Monthly Monitor asks economists to list the factors that could impact crop prices over the next six months. In the latest survey, economists said:

South American weather
U.S.-China trade relations
Election outcomes
Global geopolitical risks
Biofuel demand

The Biggest Wildcard: South America

“The biggest thing that will l impact the markets is going to be South American weather. What happens in Brazil and Argentina and what’s the size of the soybean crop they’re going to get? Right now, it is raining. The crop is being planted late. Our people on the ground in Brazil are expecting a big crop if these rains continue,” Suderman said.

While the soybean crop could see suppressed prices if Brazil grows a big crop this year, the later-planted crop could eat into the supplies of corn.

“Even where we’re at today could have an impact on that second-crop corn, given that I anticipate that we’re going to see a very robust corn export picture even without a shrinkage in that second-crop Brazilian corn. I still think there’s an upside potential for the corn market, and it’s going to be based on the size of that second-crop corn in Brazil,” said Brown.

A Recent Surge in Corn Sales

The corn export demand picture has been strong, which is thanks to a surge in sales to Mexico. T hat’s one significant factor currently fueling corn prices .

“If we didn’t have it, corn prices would be a lot lower today than where they are,” said Brown.

“When we look at the export pace that we’re on right now, it’s stronger than what we normally have at this time of year, and it’s largely been because of Mexico. Mexico has been a very aggressive buyer of U.S. corn here, at what they perceive to be the harvest lows,” Suderman said.

Outlook for Livestock and Dairy

The October Monthly Monitor asked economists to list the factors that could impact livestock and dairy prices over the next six months. Economists said:

Herd size and tight cattle supplies
Outcome of the election
Health of general economy in the U.S. and consumer demand changes
Disease issues (H5N1, etc.)
Developments in China and other major importers
Consumer demand given high meat and dairy prices
Weather in the Corn Belt and Great Plains

When Will Beef Producers Start to Rebuild Their Herds?

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

The October survey also asked economists when they think producers will start to rebuild their cow herds:

50 percent said in the first half of 2026
30 percent think it’ll happen the second half of 2025
20 percent said in the first half of next year.

“We’ve seen a slowdown of cow slaughter. That’s step one, but that’s not rebuilding,” said Suderman. “It really comes down to when do we turn this weather pattern around and start getting the pasture, the feed necessary in the West in order to incentivize rebuilding the cowherd? That is the problem right now.”

Other than weather, what else is preventing producers from starting to rebuild? Economists say it’s the average age of producers, replacement costs and heifer prices.

“I also think there is this economic pull on producers of ‘how can I justify retaining these heifers when they’re bringing the prices that they are?’” said Brown.

The Inflation Factor

When you look at what could impact both livestock and row crop producers over the next six months, a major wild card is interest rates. The October survey asked economists how much farm interest rates need to fall to find economic stability for farmers, and 46% said 2%.

Ag Economists’ Monthly Monitor

(Lindsey Pound )

But even with the Fed cutting the benchmark interest rate last month, interest rates have actually gone up, not down.

“The two-year break-even inflation rate is what the market trades. It’s expectations of what inflation’s going to average over the next two years. And over the last six weeks or so, we have seen it jump a full percentage point. That is a significant short-term jump, saying that reinflation fears are coming back in a hurry,” Suderman said.

Suderman points out the Fed can influence mid- and longer-term rates, but the agency can’t control them. And it’s concerns about inflation that are pushing those rates back up again.

“That could all change over the next couple of weeks, or it could be reinvigorated. I think longer term, what I’m looking for is a return to the interest rates that we saw in the ‘90s and early 2000. But I think there’s going to be a lot of volatility in getting there,” Suderman said.

Election Impact on Ag

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

Ahead of the election, the Monthly Monitor asked economists which presidential candidate will be more effective at taming inflation. Fifty-three percent said Donald Trump.

When it comes to providing more certainty on farm policy and crop insurance, 61 percent of economists said Trump will provide more certainty.

However, when looking at policies that benefit biofuels, 53 percent of economists said Kamala Harris.

Today, there is no clarity on 45Z that’s causing soybean processors like Cargill and Bunge to possibly slow or even idle production by the end of the year.

“We have industry looking to shut down production of biofuel. If we don’t get the 45Z requirements here released soon, and that doesn’t look likely, unfortunately, that’s going to hurt demand for soybean crushing for soybeans per se,” Suderman said.

“The fact that we don’t have those today, I think, is impeding investment in the sector. And people are asking for that before they spend millions of dollars to do that. And I think that has been a hiccup,” said Brown.

Role of the Federal Government

Heading into a crucial election with not just the presidential race, but also the House and Senate, the October Ag Economists’ Monthly Monitor asked, “What is the most important role of the federal government?”

Forty-six percent of economists ranked financial aid as the top priority. Nearly 43 percent said it’s passing a farm bill.

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

“There’s all this discussion that the safety net is inadequate relative to commodity programs, and there’s the potential for some rather large ARC and PLC payments to come,” said Brown. “But are they too late? That’s the question. Is it too late in the cycle? Does any type of ad hoc support through a farm financial package bridge that gap?”

The October survey of economists also asked them to weigh in on the fate of the farm bill. The majority of economists think Congress will pass a new farm bill in 2025, but 21 percent think it could be 2026 before it crosses the finish line.

Farm Bill Ag Economists’ Monthly Monitor

(Lindsey Pound )

Conclusion

The October Monthly Monitor reflects cautious optimism in certain areas of agriculture, marked by export strengths and potential price recoveries. But the optimism is shadowed by long-term rebuilding challenges, weather dependencies and the impact of the upcoming election.

The Recent Boom in Livestock Profitability is Masking a Harsh Reality of the Overall Farm Economy in 2024

Tue, 15 Oct 2024 16:27:48 GMT

USDA’s revised Net Farm Income projections released in early September showed net farm income will fall $6.5 billion or 4.4%, which is a major improvement from projections released in February suggesting it would fall 26%. However, economists argue those revised figures come with some misconceptions about the health of the ag economy today, and the the recent boom in livestock profitability is hiding the reality what’s really happening on row crop farms across the U.S. right now.

The lates t Ag Economists’ Monthly Monitor from Farm Journal showed a slight rise in optimism compared to the previous month, but economists remain worried about the current state of the agricultural economy when compared to last year.

It’s clear the ag economy is dominated by two very different stories this year. The livestock sector is better than what USDA forecasted in February, but the crop sector is worse.

“The margins that farmers are facing on average are really a tough place to be in for 2022 to 2024,” says Krista Swanson, lead economist for the National Corn Growers Association (NCGA). “According to USDA, the cost to produce corn dropped 5%, but the price was down 37%. And when we look at those average numbers from USDA, looking at cost of production for corn prices and yield, that comes out to average losses of $125 per acre.”

Revised Projections on Net Farm Income for 2024

USDA’s revised Net Farm Income projections were released in early September, and the updated figures were surprising to many economists. The new numbers show net cash farm income for the 2024 calendar year will fall $12 billion, which is down about 7% from 2023, and net farm income will fall $6.5 billion or 4.4%. This is compared to projections released in February of this year which suggested net farm income would fall 26%.

The latest Ag Economists’ Monthly Monitor survey, which is an anonymous survey of nearly 70 economists, asked those economists, “What was the most interesting thing you noticed in USDA’s September Farm Income update?” Economists weren’t surprised the livestock picture improved from the February report, but they pointed out the following:

“Increase in farm asset value and equity.”
“The ‘dog that didn’t bark.’ Many people expected a more dire picture in 2024, but the drop in crop prices was only a little more severe than earlier expected, and the necessary downward correction in estimates of 2024 feed costs (the earlier estimate was unreasonably high, given what was known about feed prices at the time) helped moderate overall 2024 costs. There were also adjustments upward in receipts for crops other than grains and oilseeds that boosted the receipt and income figures.”
“The simultaneous downward revision in the net farm income estimate for 2023 paired with the upward net farm income forecast for 2024, causing the year-over year 2023-2024 decline to shrink substantially.”

Potential Recession in the Agricultural Sector

The survey also asked if agriculture is on the brink of a recession, and there was no clear consensus as economists argue the livestock sector and the row crop sector are two very different stories. Seventy-five percent said yes, agriculture is on the brink of a recession, which is up from the 56% who responded that way in the previous month’s survey. However, 54% of economists argue agriculture is already in a recession, with some economists pointing to only the crop sector seeing recession concerns.

“I think yes, and it depends on how you define a recession. I define a recession as this is one of the worst years we’ve seen in the last 20. So my short answer to the question is yes. Just looking at where the price is currently at, this is about the worst year since 2007, which was the start of the ethanol boom,” Langemeier said.

It’s clear not all economists are in agreement, but when asked to expand on why, economists said:

“Financial health is weaker but still pretty strong.”
“For select crops and regions of the country farmers are facing significant financial pressure.”
“The cost-price squeeze facing the crop sector is severe and will have larger implications if it persists. Many crop producers were profitable in 2021 and especially 2022, so they had some ability to absorb a more challenging environment over the last two years. But that ability is running out, especially for producers who rent much of the land they operate or who are heavily indebted.”
“Over-production globally and exports are soft, while biofuel policy does not support consumption of surplus.”
“The farm structures across all farms does not suggest a recession. A higher portion of farms have off-farm income to support cyclical changes. Most farms have healthy balance sheets (thanks to increased land values), and there are positive returns in certain sectors of the industry supporting those that are diversified. Areas of the ag economy that will struggle are those that are highly or fully concentrated in row crops, are full-time commercial operations between 1,000 and 2,000 acres, and have a high proportion of cash-rented acres.”
“Highly-leveraged producers are feeling economic pain already. If supplies continue to remain large, lower prices may last for a longer period of time and could result in highly-leveraged producers leaving the industry.”
“The livestock sector, specifically cattle and dairy, is performing well relative to hogs and the crop sector.”

September Ag Economists’ Monthly Monitor

(Lindsey Pound/Farm Journal)

The economists were even more divided when it came to answering whether the ag economy is already in a recession. Economists said:

“The challenges faced by the crop sector are at least partially offset by a more positive story for cattle producers, in particular. For other animal sector producers, the drop in feed costs has made 2024 a little better than 2023.”
“Farmers are already feeling the pinch, and they are looking for ways to slash expenses.”
“Lenders in our state are very concerned about the outcomes for this year and the outlook for next year.”

Poor Margins for Pork Producers

Beef and dairy producers may be looking at better margins for 2024, but even with improved feed costs, pork producers are still faced with potential losses this year.

Iowa State University estimates U.S. pork producers will see an average of $13 per head loss during 2023-2025, which would be the worst three-year period for profitability in hog production in history, even worse than 1997-1999 ($12 per head loss).

The 1997-1999 time period had a dramatic impact on the hog industry and caused mass consolidation and more vertical integration.

The September Ag Economists’ Monthly Monitor asked economists: “What is the potential impact to the industry? And how is it different than what we saw in the 1990s?”

Some economists responded by saying they expect even more consolidation to take place today, but other economists say with so much consolidation already shaping the pork industry, this time period will be different.

“In the short run: not much - minimal increase in consolidation long run: some supply adjustment - depends on who has the deepest pockets.”
“Fewer hog producers.”
“The industry is already much more concentrated than it was in the late 1990s.”
“2023 was particularly difficult for the industry. The situation remains challenging, but lower feed costs have at least reduced losses. Unless demand strengthens, there will eventually need to be a contraction in supplies to generate a more “normal” rate of profitability.”
Leads to more concentration. A similar effect occurred in the 1990s

Livestock and Dairy Prices Outlook for the Next Six Months

Cattle and dairy prices are stronger than crops. The survey asked economists, “What factor(s) are you watching that you expect will impact livestock and dairy prices in the next six months?” Economists said:

The outcome of the 2024 election
Drought
Health of the ag economy
Meat demand at restaurants
Feed costs
High beef prices and the impact on beef and pork demand
If milk supplies remain weak, it will continue to lead to strong milk prices

Key Factors Affecting Crop Prices

The survey then asked economists to list the factors they’re watching that could impact crop prices over the next six months. Economists responded by saying:

Final 2024 U.S. crop production numbers
South American weather
Fall planting in South America (timing and acreage)
China’s economy/geopolitical tensions
Policy changes after the election (tariffs, impact on trade and biofuel policies)

Tariffs and Trade: A Continued Debate

The September Ag Economists Monthly Monitor, a Farm Journal survey of nearly 70 ag economists, revealed a mixed view of the presidential candidates’ impact on trade.

(Lindsey Pound)

Another area is exploring new export demand. Ag economists pointed out the outcome of the election could impact both crop and livestock prices. The September Monthly Monitor asked economists if the two presidential candidates would help or hurt trade.

55% said a Harris administration would hurt trade.
86% percent of economists said a Trump administration would hurt U.S. trade.

“Farmers are definitely concerned about trade,” says Langemeir, who helps author the Purdue University/CME Group Ag Economy Barometer and is one of the economists surveyed by Farm Journal each month. “We don’t ask specific questions related to tariffs in the Ag Economy Barometer, but one question we do ask is if they expect exports to increase, decrease or stay the same? Really, this is the most pessimistic they’ve been for about five years with regard to trade.”

Tariffs are a tool both the former Trump administration and the current Biden/Harris administration have used.

During the first presidential debate, Trump didn’t waver from his staunch stance on tariffs and trade, reiterating his plan to use tariffs to protect U.S. industries and increase revenues. Trump reinforced his plan to impose a 10% tariff on all imported goods and a 60% tariff on goods from China.

During the debate, Harris stated tariffs are essentially a “sales tax” on American households. The Biden/Harris administration recently extended the Trump-era tariffs, while also imposing its own set of tariffs in May. Biden directed the U.S. Trade Representative to “increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses.”

“That’s why I get really worried when both candidates start talking about tariffs. It’s really uncharted waters, if you will. There’s already the perception we’re struggling a little bit with trade. As we enter these uncertain waters, we’re going to struggle more,” Langemeier explained.

Do Tariffs Work?

The controversy over tariffs and whether they’re a good trade policy tool is long-standing. The September Ag Economists’ Monthly Monitor asked economists: “Do tariffs work in trade policy?” Economists views were mixed:

“Tariffs can work in trade policy — that’s why nations continue to use them. The complex part that extends beyond the tariff action is potential long-term repercussions that can result from trade-flow changes.”
“In limited cases, typically only if they result in a policy response in the targeted country. Much of the time, tariffs are like cutting off one’s nose to spite one’s face.”
“Tariffs provide short-term gains but have always failed relative to free trade in the long-term.”
“Absolutely, when properly applied.”
“Not over the long-term. They tend to affect who gets to supply different markets around the world.”

The September Ag Economists’ Monthly Monitor also asked: “When tariffs are used as a ‘tool’ in trade, who pays the tariff?” Not all economists were aligned on that answer either, saying sometimes it’s farmers and consumers, but it can also be the exporting countries.

“When the U.S. imposes tariffs on imports, importers in the U.S. pay taxes to the U.S. government on their purchases from abroad. When another nation imposes tariffs, importers in that nation pay import taxes to their government on their purchases from abroad. Often, when a tariff is implemented, another nation retaliates, and you end up with importers in both nations paying the price on whatever products the tariffs apply toward.”
“If an importing country places a tariff on the exporting country, producers in the exporting country and consumers in the importing country both lose (i.e., receive lower and higher prices, respectively). Conversely, producers in the importing country and consumers in the exporting country win (i.e., receive higher and lower prices, respectively).”
“In the short run, consumers who purchase goods with a tariff might see higher prices if the tariff is not absorbed elsewhere. In the long run, the tariff might result in changes to the supply chain that result in higher prices but also create other economic opportunities in America (e.g. reshoring of domestic manufacturing).”
“The correct economist answer is ‘it depends.’ Tariffs drive a wedge between prices in the exporting country and in the importing country. It depends on the circumstances of particular markets and how much is reflected in higher prices in the importing country and reduced prices in the exporting country.”
“Both the exporting nation and the importing consumer pay some portion of the tariff depending on who has more flexibility to adjust to a trade barrier. If exporting countries can easily switch to supplying other markets, they won’t have to ‘pay.’ If consumers can easily find cheap substitute goods, they won’t have to pay.

Conclusion: A Complex Road Ahead for U.S. Agriculture

As U.S. agriculture faces multiple challenges, from high input costs to volatile prices and geopolitical concerns, farmers are forced to find new ways to adapt. Economists emphasize the need for new demand sources, particularly in exports, to help stabilize prices and support the sector moving forward. With the outcome of the 2024 election and global market dynamics set to play pivotal roles, the agricultural sector will need to remain flexible to navigate these uncertain times.

Your Next Read: Presidential Poll Results: How Farmers and Economists View Candidates’ Impact on Agriculture

Presidential Poll Results: How Farmers and Economists View Candidates' Impact on Agriculture

Thu, 10 Oct 2024 21:42:28 GMT

Nov. 5 — election day — is fast approaching. A few weeks ago, we asked which candidate do you believe will have a more positive impact on farming policy programs, trade, biofuels policies and inflation.

Based on 4,776 respondents, here are the results:

We also asked about the candidate’s impact on agriculture overall. Here’s that breakdown by state. Make note of the seven swing states, Georgia, Nevada, Wisconsin, Michigan, Arizona, Pennsylvania and North Carolina, outlined in black.

Farmer Rationale On Harris Vs. Trump

While various polls suggest Trump has a clear edge among rural voters and there’s significant support for Trump among farmers, Jim Wiesemeyer, Farm Journal Washington correspondent, is quick to remind the community is not uniform in its voting intentions, with policy preferences and personal values driving individual decisions.

In general terms, Wiesemeyer says farmers support Trump because they:

Believe Trump better understands rural America and agricultural issues
Are concerned about his trade policies and confrontation with China
Have concerns about border security and illegal immigration under the current Biden/Harris administration
Are of the opinion Trump will lower costs for farmers, especially related to energy
Oppose what they view as socialist or anti-American policies from Democrats

Farmers support Harris because they:

Back environmental policies and renewable energy
Approve of the Biden/Harris administration’s efforts to strengthen farm workers’ rights
Believe in Harris’ food and nutrition policies
Support Harris’ economic policies aimed at working-class Americans

Economists’ Views On Harris Vs. Trump

The September Ag Economists Monthly Monitor, a Farm Journal survey of nearly 70 ag economists, revealed a more mixed view of the presidential candidates’ impact on trade.

When asked if a Harris or Trump administration would help or hurt trade, the survey found the following:

“Farmers are definitely concerned about trade,” says Michael Langemeir, an agricultural economist from Purdue University who helps author the Purdue University/CME Group Ag Economy Barometer and is one of the economists surveyed by Farm Journal each month. “We don’t ask specific questions related to tariffs in the Ag Economy Barometer, but one question we do ask is if they expect exports to increase, decrease or stay the same? Really, this is the most pessimistic they’ve been for about five years with regard to trade.”

Tariffs are a tool both the former Trump administration and the current Biden/Harris administration have used.

During the first presidential debate, Trump didn’t waver from his staunch stance on tariffs and trade, reiterating his plan to use tariffs to protect U.S. industries and increase revenues. Trump reinforced his plan to impose a 10% tariff on all imported goods and a 60% tariff on goods from China.

During the debate, Harris stated tariffs are essentially a “sales tax” on American households. The Biden/Harris administration recently extended the Trump-era tariffs, while also imposing its own set of tariffs in May. Biden directed the U.S. Trade Representative to “increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses.”

“That’s why I get really worried when both candidates start talking about tariffs. It’s really uncharted waters, if you will. There’s already the perception we’re struggling a little bit with trade. As we enter these uncertain waters, we’re going to struggle more,” Langemeier explains.

Do Tariffs Work?

The controversy over tariffs and if they’re a good trade policy tool is long standing. The September Ag Economists’ Monthly Monitor asked economists: “Do tariffs work in trade policy?” Economists views were mixed:

“Tariffs can work in trade policy — that’s why nations continue to use them. The complex part that extends beyond the tariff action is potential long-term repercussions that can result from trade flow changes.”
“In limited cases, typically only if they result in a policy response in the targeted country. Much of the time, tariffs are like cutting off one’s nose to spite one’s face.”
“Tariffs provide short-term gains but have always failed relative to free trade in the long term.”
“Absolutely, when properly applied.”
“Not over the long term. They tend to affect who gets to supply different markets around the world.”

“When the U.S. imposes tariffs on imports, importers in the U.S. pay taxes to the U.S. government on their purchases from abroad. When another nation imposes tariffs, importers in that nation pay import taxes to their government on their purchases from abroad. Often when a tariff is implemented, another nation retaliates, and you end up with importers in both nations paying the price on whatever products the tariffs apply toward.”
“If an importing country places a tariff on the exporting country, producers in the exporting country and consumers in the importing country both lose (i.e., receive lower and higher prices, respectively). Conversely, producers in the importing country and consumers in the exporting country win (i.e., receive higher and lower prices, respectively).”
“In the short run, consumers who purchase goods with a tariff might see higher prices if the tariff is not absorbed elsewhere. In the long run, the tariff might result in changes to the supply chain that result in higher prices but also create other economic opportunities in America (e.g. reshoring of domestic manufacturing).”
“The correct economist answer is ‘it depends.’ Tariffs drive a wedge between prices in the exporting country and in the importing country. It depends on the circumstances of particular markets and how much is reflected in higher prices in the importing country and reduced prices in the exporting country.”
“Both the exporting nation and the importing consumer pay some portion of the tariff depending on who has more flexibility to adjust to trade barrier. If exporting countries can easily switch to supplying other markets, they won’t have to ‘pay.’ If consumers can easily find cheap substitute goods, they won’t have to pay.

Trump Threatens Tariffs on Deere

During a policy roundtable in Smithton, Penn., organized by the Protecting America Initiative last month, Trump made significant statements regarding John Deere and its plans to move some production to Mexico. Trump threatened to impose a 200% tariff on John Deere products if the company proceeds with its plan to relocate some of its manufacturing operations to Mexico.

Farm Journal asked economists the likely outcome if Trump did follow through with tariffs. Here’s what they said:

Your Next Read: U.S. Agriculture Faces Growing Trade Deficit, USDA Projects a Record Ag Trade Deficit in 2024

How Low Will We Go? USDA Expected To Cut Their 2024 Net Farm Income Forecast

Tue, 03 Sep 2024 18:42:31 GMT

USDA’s Economic Research Service (ERS) will provide an updated 2024 net farm income forecast on Thursday. Even with improvements in livestock margins, the August Ag Economists’ Monthly Monitor showed the majority of ag economists expect the further deterioration in crop prices to weigh on the overall net farm income picture and force the agency to revise their forecast lower.

As the concerns about the ag economy pour in, there’s no doubt the ag economic picture has changed. The price of grain and oilseeds is down, while the livestock picture has improved since the beginning of the year.

Scott Brown, interim director, Rural and Farm Finance Policy Analysis Center (RaFF), University of Missouri, points out the net farm income situation would look even worse if it weren’t for more positive prices in livestock.

“Let’s not forget, February was the last time they did their net farm income forecast. And a lot of things have changed from early this year to where we sit today,” Brown said. “I do expect some revisions. Crop receipts are going to be lower than what they would have said back at the start of the year. Cattle probably higher. Hogs probably higher. Dairy probably higher. But I also expect production expenses at least not to go up from where they were originally in the first part of the year. So I’m curious how all those different pieces balance out at the end of the day.”

The August Ag Economits’ Monthly Monitor, a survey of nearly 70 ag economists from across the U.S., found:

Nearly 57% expect USDA to revise its forecast
Thirty-six percent think the revision will be 5% to 10% lower
Seven percent think USDA will leave its forecast unchanged from February

USDA is set to revise its 2024 Net Farm Income forecast in September.

(Lindsey Pound)

A Look Back at February

ERS gave its first glimpse at 2024 Net Farm Income in February with the Farm Sector Income & Finances: Farm Sector Income Forecast. At that time, the USDA ERS forecast showed net farm income to fall after reaching record highs in 2022.

The USDA ERS’ forecasts showed:

· Net farm income, which is a broad measure of profits, reached $185.5 billion in calendar year 2022 in nominal dollars.

· After decreasing by $29.7 billion (16%) from 2022 to a forecast $155.9 billion in 2023, net farm income in 2024 is forecast to decrease further from the 2023 level by $39.8 billion (25.5%) to $116.1 billion .

· Net cash farm income reached $202.3 billion in 2022. After decreasing by $41.8 billion (20.7%) from 2022 to a forecast $160.4 billion in 2023, net cash farm income is forecast to decrease by $38.7 billion (24.1%) to $121.7 billion in 2024.

The Ugly Truth

The reality is glaring. USDA’s net farm income forecast for 2024 is a $43 billion drop from 2023 to $116.1 billion. That is a 25.5% decline in just one year. What makes it even more jarring is that follows the 2023 net farm income figure, which saw a 16% drop from 2022. If USDA’s forecast holds true, that will mark the most significant two-year farm income decline in U.S. history.

“The $90-billion drop over a two-year period is certainly the largest dollar value drop, adjusted for inflation, that we’ve seen in our history,” said Ben Brown, an agricultural economist with the University of Missouri. “It exceeds the previous record set in the mid-1970s. When it comes to percentage changes, we’ve seen larger percentage changes. But you’d have to go all the way back to the Great Depression era and the early 1930s to find bigger percentage declines.”

Ben Brown also thinks USDA will revise it’s forecast lower in the upcoming report, possibly even revising their 2023 forecast, as well.

“The big change I think we could see in an update would be the 2023 farm income numbers revised lower even from where they were,” Ben Brown.

Your Next Reads: More Than 50% of Ag Economists Now Think the U.S. Ag Economy is Already In a Recession

The Ugly Truth: 2023 and 2024 Will Go Down As the Two Largest Declines in Net Farm Income Ever

Is the Fed Cutting Interest Rates Now Imminent?

Mon, 08 Jul 2024 19:54:24 GMT

The Federal Reserve has four more chances this calendar year to cut interest rates. As it prepares for its next meeting at the end of July, the Fed is watching two data points: the new inflation data to be released later this week and the mixed jobs report released last week. Since July 2023, the Federal Reserve has kept its benchmark interest rate steady at a 23-year high of 5.25% to 5.5%.

When and how many interest rate cuts continue to be a contentious point of debate. On the heels of the Federal Reserve deciding to leave interest rates unchanged during their June meeting, the June Ag Economists Monthly Monitor asked economists how many rate cuts, if any, we will see this year. Seventy three percent think the Fed will make one interest rate cut this year, 18% think it will be two cuts. That compares to the April survey when 44% of ag economists said they were becoming more pessimistic about interest rate cuts in 2024 .

When Will the Fed Cut Rates?

The Fed is not expected to cut rates at its upcoming FOMC meeting July 30 to Aug. 3. But after that, inflation data will be the key barometer. Investors currently see a 77.9% chance of a quarter-point rate cut by the Sept. 17 to 18 Fed meeting. There’s a 97.3% chance of at least one quarter-point cut by the final Fed meeting of the year on Dec. 17 to 18. However, some analysts believe the Fed could initiate its first rate cut in September if economic conditions continue to show signs of cooling. Others expect the first cut to come in the last quarter of 2024, possibly after the U.S. presidential election Nov. 5 (the FOMC meeting is Nov. 6 to 7).

Federal Reserve Chairman Jerome Powell has consistently stated the Fed is “data dependent,” which is particularly the case relative to inflation. That’s why the market will be watching the latest inflation data in the Consumer Price Index (CPI), which will be released on Thursday, along with production inflation numbers out Friday. Powell has emphasized they need “greater confidence” that inflation is sustainably moving toward their 2% target before considering rate cuts.

Many economists and investors are now anticipating two quarter-point rate cuts before the end of 2024. But the Fed’s current “dot” map signals only one cut the remainder of this year. That assumption could of course change in the months ahead.
_______________________________________________________________
Related News: The Subtle Change To Notice From The Latest Fed Reserve Meeting
_______________________________________________________________

Factors influencing the decision, besides inflation, include recent data showing a cooling job market and moderating wage growth. The pace of economic growth and any signs of recession will be closely monitored.

“If there’s an easing in labor market conditions that would encourage them, especially in front of the election, to cut rates, even if the inflation target is not met,” said Vince Malanga, Pro Farmer economic consultant and president of LaSalle Economics, recently on AgriTalk. “If the unemployment situation is softening, especially three or four months before an election, I think you’re going to start to hear some people yelling at the Fed that they’ve overdone it.”

The Labor Department’s June jobs report released Friday showed employers added 206,000 jobs, but concerns remain about the labor market. Despite a slight increase in the unemployment rate of 4.1% due to more people entering the work force, labor force participation among prime-age workers is at its highest point in over 20 years.

However, job growth is slowing, with downward revisions for May and April totaling 111,000 fewer jobs. Nearly three-quarters of June’s new jobs were in government, healthcare and social assistance. While the report doesn’t indicate an imminent recession, it shows an increasing role of government spending in job creation.

Fed Officials Weigh In

Farm Journal spoke to Austan Goolsbee, president and chief executive officer of the Federal Reserve Bank of Chicago , during the Iowa Farm Bureau’s Economic Summit in June. With more work to do in order to get to the Fed’s target of 2%, he says the Fed is also watching the jobs market closely. Up until this point, Goolsbee has been impressed with the resilience of the general economy.

“If you look, for sure internationally, at the U.S. growth, we’ve grown a lot,” Goolsbee says. “We’re actually higher than where we would have been when people were making predictions of where the GDP would be at this point before they had ever heard of COVID. We’re actually above where they were predicting we would be. We’re the only economy where that’s true. I’ve been very impressed with that resilience.”
_______________________________________________________________
Related News: Is the U.S. Ag Economy Heading Toward a Recession? A One-on-One with the President of the Chicago Fed
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Goolsbee says if inflation data continues to come in lower, and the jobs growth posts strong gains, then the Fed could cut rates to more normal levels. But until then, Goolsbee insists the Federal Reserve won’t budge on interest rates.

John Williams, Federal Reserve Bank of New York president, stated that although inflation has recently decreased toward the Fed’s 2% target, reaching the goal will take more time. Currently, inflation is around 2.5%, reflecting significant progress, but sustained 2% inflation is still a way off. Williams reiterated the Fed’s commitment to achieving this target during an event at the Reserve Bank of India in Mumbai.

He emphasized the importance of maintaining “well-anchored” inflation expectations and discussed the challenges of measuring key economic indicators, such as the long-run neutral interest rate, or r-star. He disputed claims that the neutral rate has increased since the pandemic, noting estimates that place it near pre-Covid-19 levels in both the U.S. and Eurozone. In June, officials raised their longer-term rate estimates to 2.8% from 2.6% in March.

Will Congress Pass a New Farm Bill in 2024?

Mon, 03 Jun 2024 18:25:19 GMT

The farm bill finally saw some movement in Washington last month, but the majority of agricultural economists still don’t think a farm bill will be passed until 2025, with some even saying it could be 2026.

The May Ag Economists’ Monthly Monitor , a survey of nearly 70 agricultural economists from across the U.S., asked economists when they believe Congress will pass a new farm bill. Sixty-eight percent of the economists replied they expect it to be passed in 2025.

Nineteen percent said it could be in 2024, which is an increase from the April survey when zero ag economists said 2024.

However, some ag economists think the farm bill will be passed in 2026. Thirteen percent responded 2026 in the latest survey, which is in line with the results from last month’s survey.

“If a bill is not completed in 2024, the dynamics could be very different in 2025. Regardless of the election results, the upcoming expiration of various tax provisions is likely to put pressure on Congress to reduce, or at least not increase, spending elsewhere,” said one economist in the anonymous survey. “Unless the filibuster is eliminated, even a Republican Congress could find it hard to finance increases in spending on farm programs by limiting spending on SNAP. Thus, I expect smaller farm program changes than are currently being discussed.”

The latest survey also asked economists what are the most important changes for producers in the next farm bill, and what potential changes in farm policy are being overlooked. Economists shared nine potential changes:

Higher subsidy levels for area-based products.
The wild card is milk pricing system.
Ongoing trends toward more environmental regulation from USDA agencies, supported by progressive elements in Congress.
The focus has been on changes to reference prices, and potential additional funding for export markets could be an important change.
Expect increases in crop insurance premium support (subsidy) levels for higher coverage levels and for area products.
Commodity program changes will ultimately be modest, but will favor cotton, rice and peanuts. Despite that, the safety net will be more significant across the board in the next few years because of the recent price history and the moving average calculations.
Constraints on the Secretary’s CCC spending will affect administrative programs and proposals going forward.
Based on what has been released so far, it seems like reference price changes are going to be the big change that impacts producers. A potential change in farm policy that is being overlooked is the need for a base acre overhaul (not just voluntary).
Reference price increases will be the most important change.

What’s Next for the Farm Bill?

As Farm Journal Washington Correspondent Jim Wiesemeyer reported two weeks ago , the House version of the farm bill made it out of committee just before Congress broke for a week-long recess. The contentious House Ag Committee markup of a new $1.51 trillion farm bill began on Thursday, May 23, and went into early Friday morning with four Democrats joining all 29 panel Republicans in voting for the measure, bringing the final tally to 33-21.

There a couple different paths to move the bill forward, but nothing has been set. House Speaker Mike Johnson could bring it to the House floor once he’s certain there are enough votes.

House Ag Committee Chairman GT Thompson recently stated that of the 435 members of Congress, more than half have never debated or voted on a farm bill before. He called it a unique challenge that requires a lot of education to bring people up to speed.

However, Wiesemeyer also says it could go to the House Rules Committee first, and there, the bill faces a couple of roadblocks for passage, including not only getting enough Democrats to support the bill, but also finding the support of hard-right Republicans.

The Senate version is a different story, as the the Senate Ag Committee hasn’t released the complete bill, only a preview of what is in it. What are the key differences in both the House and Senate versions of the farm bill? Wiesemeyer broke it all down here .

As Farmers Look to Cut Costs for 2025, Machinery and Technology Could Take the Biggest Hit

A Margin Squeeze is Setting in Across Row-Crop Farms, and 80% of Ag Economists Are Now Concerned It’ll Accelerate Consolidation

A Contentious House Ag Committee Markup of a New $1.51 Trillion Farm Bill Passes Out of Committee

What You Need to Know About the Key Differences Between the House and Senate Versions of the Farm Bill

House Agriculture Committee Set to Mark Up 942-Page Farm Bill Draft

As Farmers Look to Cut Costs for 2025, Machinery and Technology Could Take the Biggest Hit

Fri, 31 May 2024 16:24:27 GMT

Commodity prices have seen a bit of a rebound over the past month, but even with optimism beginning to surface with prices, agricultural economists think net farm income could fall more than expected, and the fallout could be felt with just how much farmers scale back what they purchase over the next year.

The May Ag Economists’ Monthly Monitor , a joint survey of nearly 70 ag economists conducted by the University of Missouri and Farm Journal, is one metric to help gauge the health of the ag economy. As global weather and geopolitical events continue to impact the markets, ag economists grew slightly more optimistic on the health of the overall ag economy in the past month.

“I think you can look at things like crops in South America, you know, we’ve had some disease issues in places like Argentina, we’ve had some wet weather in Brazil, some of those things, I think, have been helpful to boost prices at the same time. The wheat situation in Russia, I think, has also been important in terms of prices,” says Scott Brown, interim director, Rural and Farm Finance Policy Analysis Center (RaFF), University of Missouri.

(Farm Journal)

Brown helps author the Ag Economists’ Monthly Monitor, and he says the May Monitor shows even with more optimism for some commodities, ag economists’ views on the net farm income picture slightly eroded over the past month, falling from the $117.82 billion projected in the April survey, to $110.4 billion in May.

“I think it’s important to remind ourselves, the changes happen really quickly,” Brown says. “The volatility up and down, is going to continue in front of us. So, although we generally say the trend is down, there will be opportunities for better prices in front of us at times.”

(Farm Journal)

Arlan Suderman, chief commodities economist for StoneX, is one of the nearly 70 ag economists surveyed each month. He says even with the global grain and oilseed supply weather issues around the globe, his outlook on the ag economy hasn’t changed course.

“I don’t think it really has, if anything, I think it’s become a little bit more challenging,” Suderman says. “But I say that within the context. I think that the new world we’re in is going to have more challenges. But those challenges will also create more opportunities. It just means we’re going to have to be more strategic. We went through several years where you could be a lazy marketer and do pretty well - build equity in your farm, expand your operation and buy equipment. We’re going to have to be more strategic in it now. And I think the opportunities are going to be there for the person willing to do so.”

Farmers Forced to Cut Costs

Last month’s survey found nearly 80% of ag economists think current commodity prices, plus higher input and operating costs will spur consolidation within the row crop sector. This month, the survey asked what purchasing decisions may take a hit in the months ahead.

At the top of the list of purchase changes for 2025 was decisions regarding equipment. When asked if farmers would reduce machinery purchases for 2025, 50% of ag economists responded “most likely,” and the other 50% said “somewhat likely.”

“It seemed scaling back on machinery purchases was really the number one purchase change, and I don’t think that’s a big surprise. Almost everyone thought that was one place where we would see cutbacks in terms of trying to reduce costs,” Brown says.

“I think in the short-term, that is the easy answer is they’ll scale back on equipment purchases, and we’ve seen that,” Suderman says. “We would also anticipate them to scale back on some of those fertilizers that have less short-term impact, maybe phosphorus, potassium, some of those. I think farmers will stick with the seed technology, they’ll stick with the technology they think gives them the efficiencies that they need in their production.”

Economists point out machinery purchases are likely to slow, which will reduce capital costs, but could also potentially increase repair and maintenance expenditures.

(Farm Journal)

Another change ag economists think farmers will make is to slow technology upgrades. 35% responded a move to scale back technology upgrades is “most likely,” and 41% said “somewhat likely.”

The May Ag Economists’ Monthly Monitor also found ag economists think more farmers will make the switch to more generic products, with 73% surveyed responding with “somewhat likely.”

Economists also think another change for the upcoming year could be looking for lower interest rates. 65% said “somewhat likely,” 27% said “most likely.”

“I think for producers, in terms of what they want to add in 2025, are already beginning to focus on the changes they can make to be more efficient,” Brown says. “This idea of how to reduce costs when the prices for those inputs maybe aren’t going to change as much as they would like, and how to manage those margins, there is really going to be some opportunities to do that to try to make 2025 a better year.”

Economists Paint Mixed Picture on Price Outlook

As farmer possibly look at ways to cut back on spending, volatile commodity prices have become the new norm for farmers. As economists point out, the direction of commodity prices also now hinges on more than just supply and demand.

“Well, I think the biggest impact is probably geopolitical risks, and the advent of the funds, trying to interpret all of that,” Suderman says. “And as you look at the management of billions of dollars now invested in commodities, either being long and buying them or being short selling them, based on what they see happening in geopolitics, based on what they see in the economy, are we in a re-inflation period? Are we in commodity deflation period? And that’s really driving the economy, more than the actual supply and demand fundamentals.”

(Farm Journal)

Still, Suderman and other economists say in the short-term, the outlook for grain prices will center around supply and what happens with weather. One of the major wildcards for the summer is the transition from El Nino to La Nina, and not only how quickly it occurs, but what areas of the U.S. crop and cattle production could be hit by dry and hot weather.

Suderman still thinks the health of the U.S. and global economies will be a critical piece to watch over the next 12 months, particularly if we reestablish inflation.

Other economists also pointed to inflation in the May Monthly Monitor. “I expect a return of inflation and tighter credit due to expanding Congressional spending and the expanding national debt,” said one economist in the anonymous survey.

Beef Prices and Demand

The inflation piece is something Suderman says could impact both grain and livestock prices, especially considering demand and the health of global economy will have a major impact on prices as we test just how much consumers are willing to pay.

“We’re in a world economy where imports of beef in the first quarter of this year were up 25% year on year. So, when we get too expensive, we simply import more. And then the consumer is the driver of what that the demand factor is moving forward,” Suderman says. “If we keep the consumer confidence and we prop it up, they’re willing to pay more, which means import more but holding up our domestic prices. If they’re not, then those imports start to overwhelm us and pressures beef prices even more.”

(Farm Journal)

Pork Price Outlook

Impressive export demand has also been a bright spot for U.S. pork producers. The strong export picture has propelled prices for hog producers across the U.S., which helps paint a more positive picture for an industry that was hit hard over the past 12 to 14 months.

“Hog prices, I think, have been the surprise, and a surprise in a good way,” Brown says. “We started 2024 with lower prices. Generally, those in the survey answering about pork prices would have been slightly more optimistic relative to the last. So, I think when you look at where wholesale pork prices are today, they could be supportive of yet higher hog prices.”

Brown points out consumer demand is also a major factor for the trajectory of hog prices the remainder of the year.

“If consumer demand were to slow, and that’s just as much international demand that has the attention of the economist in terms of international demand has been good for pork this year, if it were to waver in the second half, that could be more troubling for where we’re at the pork market,” Brown says.

What else are economists saying about the ag economy? You can view previous Ag Economists’ Monthly Monitor updates here .

Why Ag Economists Think Net Farm Income Could Fall to Lowest Level in 3 Years

Wed, 31 Jan 2024 15:31:53 GMT

Agricultural economists’ views on the ag economy took a dive in the first Ag Economists’ Monthly Monitor of 2024. Lower commodity prices, along with the outlook for higher costs, continue to weigh on the agriculture industry. However, ag economists think relatively strong balance sheets and working capital could provide a cushion for 2024 with no major concerns about immediate farm solvency issues.

“We certainly saw the results in the January numbers suggesting a downturn, probably the largest downturn since we’ve started the survey,” says Scott Brown, an agricultural economist with the University of Missouri who also helps author the Ag Economists’ Monthly Monitor.

(Farm Journal)

Brown says from December to the latest survey in January, projections for corn prices fell 25 cents, just one sign that economists are growing more pessimistic at the start of the year.

“I don’t want to make a trend out of just one survey, but if we continue down the path that we started with the January estimates, perhaps we’re telling 2024 to be a less positive story than we would have just a few months ago,” Brown says.

The January survey asked economists to pinpoint the two most important factors driving agriculture’s economic health today, and in the next 12 months. Economists said:

Declining commodity prices and complicated production costs, including stubbornly high interest rates juxtaposing reduced expenses in certain inputs.
Commodity production and demand traveling in opposite directions.
Macroeconomic factors domestically and abroad, as well as geopolitical factors.

In contrast, economists say the most negative aspect regarding the outlook of U.S. agriculture includes:

Competition and expanded production in the global market paint an interesting export picture.
Political stagnation, which could impact biofuel and trade policy.
Compressing margins due to lower prices and higher expenses (including interest rates).

When asked what they view as the most positive aspect of the outlook for U.S. agriculture, economists looked beyond just yields and potential demand:

Agricultural product demand growth has potential in the right environment.
Resiliency and innovation of the U.S. farmer; includes financial resiliency and ability to weather tight margin environment.
Strong crop yields, despite weather challenges.
Double-edged sword of lowered grain prices making feed prices more affordable for livestock industries.

Forecast for Falling Net Farm Income

(Farm Journal)

Ag economists’ forecast for prices of all crops and livestock shifted lower compared to the December survey, signaling net farm income could also fall more than originally anticipated. The January survey found economists views on net farm income also took a turn, with the survey average falling to $135 billion for 2024.

“Let’s just remember that back in 2020, we would have talked about net farm income and about $95 billion. So, this is still much higher than where we would have been in that kind of 2016 through 2020 period,” says Scott Brown.

(Farm Journal)

However, not all ag economists are forecasting net farm income to fall as low as what the survey revealed. While the average net farm income estimate came in around $135 billion for 2024, the range was of answers from economists was $100 billion to $150 billion.

“What surprised me, I think, is the nature of the pessimism amongst people, relative to expectations. To me, I think net farm income will be down, but maybe not near as low as current expectations are suggesting in that $120 to $130 billion range,” says Ben Brown, assistant extension economist with the University of Missouri.

Ben Brown is one of nearly 70 economists surveyed each month for the Ag Economists’ Monthly Monitor. He, along with a handful of other economists in the most recent survey, think hog and dairy could see a more profitable year in 2024, thanks to lower feed prices.

“We’re going to see lower revenues on the crop side, but we’re going to see record profits, potentially, on the on the cattle side,” says Ben Brown. “We’re also going to see your recovery in pork and poultry profitability as well, at least in my expectations over the next couple of years.”

Bullish Beef

(Farm Journal)

Economists were asked to rank each commodity by financial strength—10 being the strongest, 1 being the weakest. Scott Brown says it’s no surprise cattle continues to top that list.

“When you look at where we’re at on prices, we’ve lost in the last couple of months a little bit of cattle price strength, but I think it’s starting to turn back around, and just how tight we are on the supply side,” says Scott Brown.

Soybeans ranked second in the January survey, followed by sorghum, corn and wheat. Ag economist Bill Lapp says declining commodity prices for crops continues to be the headline.

“I think the January 12 reports gave us maybe some cold truth that we weren’t ready for,” says Bill Lapp, president and founder of Advanced Economic Solutions. “We had record corn yields, even in the face of a lot of areas having far from optimal weather. So, that was maybe a bit of a surprise that we probably weren’t completely shocked by, that led to increases in ending stocks, although modest, it did put a damper on the market going into the remainder of the winter.”

The Reality of Growing Supplies

As USDA prepares for its ag outlook forum next month, USDA will provide the first glimpse of supply and demand projections for 2024/2025. Lapp thinks the theme of growing stocks will continue, and serve as a wet blanket on crop prices.

“When you pencil it all out, it looks like even with a decrease in corn acreage, we’re going to have another year of building stocks in corn,” Lapp says. “We expect at least some increase in soybean acreage. And that will lead to some building of soybean stocks as well, and last time we saw this was the 2012 through 2015 period where we were we push prices sharply lower.”

Lapp points out there are things that make the current market unique, including higher production costs, interest rates and the value of farmland. Another factor is the current strength of the U.S. dollar.

“The cost of production for U.S. producers has gone up significantly,” Lapp says. “And we can talk about the different aspects of that, but one would be seed costs, fertilizer costs - although they reverse themselves now - interest costs and land rent costs have increased significantly to the point where we are nowhere near where we were in 2008 in terms of cost of production for corn or soybeans. We’ve increased those dramatically.”

Relief in Feed Prices for Livestock Producers

If grain prices fall, ag economists point out it’s a double-edged sword—one that could drive down profit margins for row crop farmers, but help ease the pain of high feed prices for livestock producers.

“On the dairy side, I think cheese prices have continued to struggle. And I think that’s kept class three prices lower than maybe some would have thought by now,” says Scott Brown.

The rankings of commodities by economists showed another dreary outlook for the pork industry. However, Lapp thinks hog producers could see some relief this year.

“The report didn’t offer much hope for commodity financial strength for hogs. It was at the bottom of the barrel, but I think that could that’s one area that could surprise us,” Lapp says. “Right now, the hogs are under great duress, but I think that could turn around at some point because they have such a sharp decrease in beef supplies and their feed costs are coming down as well.”

Some hog producers just saw the worst year on record, with profit margins in the red. Dairy producers saw much of the same. So Ben Brown thinks the only direction may be to go up from here.

“I do think we’ll see some profitability returned to those sectors over the next two years. But again, it’s kind of based on relative positioning. There’s not a whole lot more we can haul and not a whole lot lower we can go in both those sectors,” says Ben Brown.

What to Watch into 2025

Economists were also asked how they expect their ranking of the financial strength of commodities to change by 2025. Economists who responded to the survey had mixed feedback on crop commodities, but several responses predict a weaker outlook for most crops.

However, economists note relatively strong balance sheets and working capital are helpful in this situation, with economists not concerned about immediate farm solvency issues.

Economists were generally positive on the livestock side, with the majority indicating cattle will have another strong year, but warned cattle prices will likely trend lower eventually. Economists also noted hogs, dairy and poultry could see a positive turnaround, thanks to lower feed costs and lower supplies of market-ready livestock with improve profitability.

Better Yields and Improved Crop Prices Propel Ag Economists' Outlooks for 2024

Wed, 22 Nov 2023 20:26:11 GMT

After two months of a waning outlook on the ag economy, economists’ views took a turn in the November Ag Economists’ Monthly Monitor , a survey of nearly 70 ag economists from across the country.

“The biggest takeaway I see out of the Monthly Monitor this month is we’re seeing a lot more positives than we’ve seen for the last couple of months,” says Scott Brown, the interim director for the Rural and Farm Finance Policy Analysis Center (RaFF) at the University of Missouri, who also helps author the Ag Economists’ Monthly Monitor.

The Ag Economists’ Monthly Monitor is conducted by the University of Missouri and Farm Journal each month, as it’s a way to gauge not only the state of the ag economy but also explore the impacts of policy and trade. Brown says as commodity prices have seen some momentum, outlooks among economists are also shifting more positively for 2024.

“I think when you look at where we are in terms of our estimates for crop prices, and we’re talking about crop prices for harvest next fall at this point, we saw a number of more positive responses, maybe the most positivity since we started our estimates for 2024/2025. As both corn and soybeans continue to move higher, there’s more positive news this month,” Brown adds.

Spike in 2024 Net Farm Income Forecasts

(Farm Journal)

That positivity also boosted net farm income estimates. The November Monthly Monitor asked ag economists to provide their outlook for net farm income in 2024. The survey found ag economists now expect a big spike in net farm income forecasts for the new year.

“Farm income estimates were raised almost $5 billion for 2024, relative to what they would have said in October,” Brown says. “And I think that just resonates as you look at higher estimates of corn prices and higher estimates of soybean prices, things just look a little better than where we were a couple of months ago.”

(Farm Journal)

What’s driving improved outlooks in the farm economy? Economists say commodity prices, including improved yields and harvest picture for some commodities.

Another major factor is South America. When asked what factors will impact crop prices in the next six months, economists say:

South American crop production (including weather impacts on planted acres) and related export sales.
Global dynamics in general, as well as conditions and production in key regions like the Black Sea and China.
U.S. export demand strength and growing crop supplies.
Final U.S. crop size and weather-related impacts.

Weather Worries in South America

The latest USDA report pegged Brazil’s corn production at 129 million metric tons, but according to the Monthly Monitor, that estimate may be too optimistic.

“Our survey of the economist would have suggested 126.5 mmt right now,” Brown says. We did have some answering very near that 129 mmt and others saying 125 mmt. It’s a combination of weather as well as economics, not all that great. That is leading to some lower estimates.”

When asked what’s driving changes in the crop forecasts for Brazil and Argentina? Economists say it’s all about weather, the impacts of El Nino and delayed planting that could eat into the Safrinha corn crop in Brazil. Economists also say Brazil could be looking at fewer soybean acres.

“Uncertain, volatile weather conditions - either too wet or too dry as Brazil transitions from La Nina to El Nino weather patterns,” says one economist when asked what are the factors driving the change in estimates for the Brazilian soybean crop. “Plus, delayed plantings of the 2024 Brazilian Soybean crop with substantial replantings required is hurting production potential.”

Bullish Views on Cattle Continue

While views on crop prices turned more positive in the latest Monthly Monitor, economists are still bullish longer-term on cattle.

“I think folks are more positive still on the cattle side of the equation, despite what’s been the last few weeks of some lower cattle prices,” Brown says. “We are talking about an industry that continues to talk about record or near record, and perhaps in early 2024, we get back to record prices yet again.”

(Farm Journal)

The outlook for pork prices, as well as dairy, continued to see some pressure, but overall, the factors economists think will impact livestock prices over the next six months include:

Weaker demand domestically and globally.
Global economic health, including slowdown/recession in some geographies.

Health of the Farm Economy by Geography

This month’s survey also asked ag economists to rank the health of the farm economy by geography. The strongest region of the country, according to economists survey, is the Midwest.

“I think we ended up with especially better corn yields than anybody would have thought. Maybe soybean yields are not even as bad as some would have suggested. And then again, cattle still being very positive there, Brown says.

(Farm Journal)

According to economists surveyed, there were a multitude of factors that played into how they ranked each geography, including:

Drought and weather
Government policy impacts upon state and metropolitan economic health.
Commodity /crop mix

“Certainly, crop and livestock mix is important,” says one economist in the anonymous survey. “While corn prices are lower the combination of yields and prices were likely profitable for many. But lower prices have come on the heels of very high prices in the last couple of years. Hog and dairy returns are dragging down financial health in the sector regionally. Cattle prices are boosting overall returns in the Plains. But drought has certainly hurt ranchers, including water in the West.

Impact of Interest Rates (Both Positive and Negative)

Economists are still concerned about how interest rates could negatively impact agriculture over the next 12 months, but for the first time, economists now view it as a possible positive over the next year.

When asked, “What do you view as the most negative aspect regarding the outlook of U.S. agriculture?”, the Monthly Monitor shows:

High interest rates, market volatility and a shortage of working capital create a challenging economic climate.
Production challenges range from weather conditions to commodity prices and policy support.
A need for investment into increasing domestic and demand for U.S. products.

When followed up with, what do you view as the most positive aspect regarding the outlook of U.S. agriculture, economists say:

Economic resiliency of the farm operator, including strong financial positions for some operators and farm income forecasts remaining above the long-term average. Some optimism for stabilizing interest rates.
Promising new demand opportunities, including the expansion of biofuel uses, as well as continued consumer demand.
Improvements in technology and the possibility of better production in 2024.

“The news that we seem to be getting right now is, although inflation is still a problem, maybe less so than we would have thought. So perhaps we’re getting near the end of interest rate increases, I even see some out there suggesting we could get lower interest rates as we get into 2024,” Brown says.

Outlook for Crop Mix in 2024

Economists were also asked to shift their focus to 2024. Economists say the most important factors that could affect 2024 crop plantings/acres in the U.S. are:

Spring 2024 weather conditions and drought concerns.
Corn-soybean price ratio affecting decisions, as well as planting prospects for corn/soybeans/cotton and wheat profitability.
Changes in output prices, higher input costs, crop insurance price levels and 2024 futures prices affecting planting decisions.
South American crop production and demand (domestically and globally) impacting prices.

Will Border Security Issues Force Congress To Take Action On Immigration Reform? Ag Economists Say It's Unlikely

Mon, 13 Nov 2023 14:45:25 GMT

The debate over immigration and border policies continues to be a point of contention in Washington. With a renewed push by the GOP to address illegal border crossings, and the White House emphasizing the need to allocate more than $13 billion to manage the increase of migrants into the U.S., the topic as at the forefront of policy discussion once again. However, ag economists are still skeptical immigration reform will finally see movement in Washington.

In the October Ag Economists’ Monthly Monitor, a survey of nearly 70 ag economists from across the U.S., economists were asked if they expected to see any movement on immigration reform in 2024. Nearly 83% of respondents said no. Just over 8% said yes, with the remaining economists, or just over 8%, unsure about the outcome in 2024.

Of the overwhelming number of economists who said they don’t think Congress will move on immigration reform in 2024, the reasons included:

Election year in 2024 will stall potential legislation, although it might be a focus during campaigns.
Political gridlock and competing priorities make a bipartisan solution unlikely, especially with a sensitive issue like immigration reform.

The biggest hurdle, according to respondents, is the fact it’s an election year, as well as how controversial the issue is. One economist even called it “politically unpopular.”

“Congress has a vested interest in keeping this issue unresolved in the current partisan environment,” responded an economist in the latest survey.

Another economist said, “Getting anything started and passed in an election year will be tough, let alone something as confrontational as immigration.”

A different economist in the October survey said immigration reform won’t happen because, “Too many other issues to happen first. Congress and the administration are too far apart to find an acceptable resolution. Legislators don’t have the fortitude to address it.”

However, one economist who thinks Congress may address immigration reform in 2024 said their response is due to the fact that “Right to Shelter will be rescinded in certain major cities that have reached the breaking point.”

It’s evident immigration reform is a major issue for agriculture. One economist said, “Immigration reform is a huge issue for the U.S. economy and MUST be addressed. However, it is so politically sensitive that very few Senators or Congressmen are willing to push the issue.”

Ag Labor Void

The survey also asked economists if they thought U.S. agriculture will be able to utilize the influx of immigrants at the southern border to fill the void in ag labor. While the feedback was mixed, most were not confident due to mismatched skills and what they called ‘noise’ in the system. Other economists indicated that some of that labor could possibly be used, particularly for specialty crops like fruits and vegetables.

“The ‘immigration problem’ at the Mexican border is a humanitarian problem, as well as an immigration issue,” said one economist. “Many of the new immigrants entering at the Mexican border are being moved to the East or West Coast. It will be hard for ag to access this potential workforce.”

What Will It Take for Congress to Take Action on Immigration Reform?

As the issue continues to draw criticism and debate, economists were asked: what’s the one thing that would need to happen in order for Congress to take action on immigration reform in the next couple of years? While sentiments were largely pessimistic on any action, some economists think increased pressure from labor markets could prompt Congress to take action.

One economist said “cooler minds” is what it would take for Congress to find compromise.

“A perceived crisis where both parties can agree on a solution. In other words, a very unlikely situation,” said another economist.

Another economist said, “Elect smart people.” While one economist in the anonymous survey said, “One part would need to gain total control.”

Another economist thinks the only way to find a solution is to, “Separate ag labor from broader immigration discussion.”

A Bipartisan Issue?

According to Farm Journal Washington correspondent Jim Wiesemeyer, Republicans are currently pushing for changes in immigration policies aimed at deterring illegal border crossings. He says they want to address border security issues and make it more difficult for migrants to enter the U.S. without proper documentation.

At the same time, Wiesemeyer reports Democrats, including President Joe Biden, emphasize the need to allocate $13.6 billion to manage the increasing number of migrant arrivals. They argue that this funding is essential to address the current challenges at the border.

“The debate over immigration is causing tensions in Congress, particularly as it relates to funding for Ukraine and other foreign aid initiatives. There is a risk that disagreements over immigration policies could lead to delays or the derailment of government spending and aid packages,” reports Wiesemeyer.

He also points out that Democrats are facing pressure to compromise on immigration, with House Speaker Mike Johnson (R-La.) pledging to link a substantial border package to aid for Ukraine. He says Senate Republicans are also seeking to incorporate policy changes in an emergency funding discussion with some Republicans advocating for bipartisan efforts to address border security.

“They are proposing changes to asylum policies, including raising the bar for ‘credible fear’ claims and reinstating the ‘Remain in Mexico’ policy for asylum-seekers,” says Wiesemeyer.

He also reports key Democrats are opposed to Republican demands on immigration policy changes, as they doubt the possibility of reaching a workable middle ground during time-sensitive funding negotiations. But some Democratic lawmakers, such as Sen. Mark Kelly (D-Ariz.), express a willingness to address border security issues but reject “draconian” policy ideas that could harm migrants. They seek more humane solutions.

Senate Homeland Security Committee Chairman Gary Peters (D-Mich.) urged colleagues to focus on measures that already have bipartisan support, such as increasing the number of border patrol agents and Customs and Border Protection officers, which align with President Biden’s request. House Minority Leader Hakeem Jeffries (D-N.Y.) indicated a willingness to consider any bipartisan border proposal put forward by the Senate.

Ag Economists Monthly Monitor

New Data: Is U.S. Agriculture Facing a Typical Cycle or a ‘Geopolitical Reset’?

A Fundamental “Structural Shift”

Geopolitical Impacts on Input Costs

Strategic Deferment of Capital Expenses

Economists Forecast Farm Economy to Stabilize, But High Costs and Policy Uncertainty Block a 2026 Rebound

Stabilizing, Not Recovering

Consolidation a Growing Threat

What’s Driving the Farm Economy Right Now

Livestock: A Continued Bright Spot

What Could Move Crop Prices in the Next Six Months

Biofuels Policy: A Potential Turning Point?

Policy Uncertainty Still Looms

What Could Move Livestock and Dairy Prices in the Next Six Months

Acreage Expectations: Stress, Not Shock

Overall, The Ag Economy Is a Grind, Not a Rebound

As Screwworm Inches Closer, When Could the U.S. Reopen the Southern Border to Cattle Imports?

Critical Timing with Calving Season Approaching

The Possibility of Reopening the Southern Border

$4 Feeder Cattle: Dream or Reality?

When Will We Hit the High?

Ag Economists’ Monthly Monitor Predicts Bull Market to Continue

What Could End the Rally?

“Beef Prices Can Stay High Longer Than Most Expect”

U.S.-Mexico Border Battle Continues As the Threat of New World Screwworm Intensifies

Mexico’s Response To New World Screwworm

U.S.-Mexico Border Remains Closed to Cattle Trade

Texas Rancher Weighs In On Impact of New World Screwworm

Is the Ag Economy in a Recession? Why Economists and Farmers Don't Agree

59% of Ag Economists Think Congress Won’t Pass a New Farm Bill Until 2026

Economists Fear Trade War Will Push Agriculture Deeper Into a Recession

Economists Fear the U.S. Will See a Recession in 2025, And That Could Eat Into Consumers' Demand for Meat

New Warning Signs Agriculture Is In A Recession

Poll Results: More Than Half of Farmers Say They Don’t Support Trump’s Use of Tariffs

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

10 Charts to Explain What's Shaping the Ag Economy to Start 2025

Do Tariffs Work? Leading Ag Economists Weigh In

10 Understated Things Economists Say Could Impact Agriculture in the New Year

Majority of Ag Economists say U.S. Agriculture is Ending the Year in a Recession

How Higher Interest Rates Could Impact Farmers in 2025

A Possible Recession Still Hangs Over the Ag Economy, But Positive Shifts Are Starting to Surface

The Recent Boom in Livestock Profitability is Masking a Harsh Reality of the Overall Farm Economy in 2024

Presidential Poll Results: How Farmers and Economists View Candidates' Impact on Agriculture

Farmer Rationale On Harris Vs. Trump

Economists’ Views On Harris Vs. Trump

Do Tariffs Work?

Trump Threatens Tariffs on Deere

How Low Will We Go? USDA Expected To Cut Their 2024 Net Farm Income Forecast

Is the Fed Cutting Interest Rates Now Imminent?

When Will the Fed Cut Rates?

Fed Officials Weigh In

Will Congress Pass a New Farm Bill in 2024?

What’s Next for the Farm Bill?

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Will Border Security Issues Force Congress To Take Action On Immigration Reform? Ag Economists Say It's Unlikely

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What Will It Take for Congress to Take Action on Immigration Reform?