Farm profit outlook declines
A survey of 70 agricultural economists revealed consensus that incomes will dive to $117 billion this year from about $124 billion last year.
Their outlook is far more pessimistic than the United States Department of Agriculture’s figure of $121,7 billion.
The monthly monitor of the agriculture economists indicates they expect operating costs to stay high because of high interest rates.
The result will be a major hit to profits.
The February monthly monitor shows more than 40 per cent expect interest rates to fall no more than one per cent this year, and 44 per cent are becoming more pessimistic about any interest rate cuts in 2024.
“It looks like corn prices will be below production costs for many producers. We have not had that for a long time, especially since the ethanol boom started almost 20 years ago. The struggles this time will be for corn farmers. Producers of other crops like cotton, wheat and rice have had difficult years,” said one economist.
The ripple effect of the sudden downturn, according to other economists, could be a slowdown in new equipment sales and a correction in land values.
“A slowdown in new equipment sales, slow upward creep in loan defaults, some leveling off of growth in land values,” saId one economist.
“Moderation of land value gains on the one hand, and deteriorating financial conditions for farmers involved in U.S. wheat enterprises,” said another economist.
“Producers without significant cash reserves will start to get squeezed. I would expect rental rates to slow down or even fall,” said another.
