YOUR BUSINESS AUTHORITY

Springfield, MO

Log in Subscribe

Opinion: Another weak year predicted for farm economy

Posted online

A recent U.S. Department of Agriculture analysis projects 2019 net farm income again will be well below normal.

This broad measure of farm profitability has disappointed farmers for at least the past five years. Despite the continued downturn, Missouri farmers have glimmers of hope on the horizon.

The U.S. Department of Agriculture’s Farm Sector Income Forecast, released March 6, projected 2019 net farm income at $69.4 billion nationwide. This projection is about a 9 percent increase over 2018.

While a 9 percent increase sounds promising, it comes off a severe low. Last year was the second-lowest level in the past decade.

Even with the projected increase, 2019 would still mark the third-lowest amount in 10 years. When adjusted for inflation, 2019 is projected to be in the bottom 25 percent all-time. These figures range from 1929 to the present, with over 90 years of data.

According to John Newton, chief economist for the American Farm Bureau Federation, most of the increase is coming from increased yields and slightly higher commodity prices. But Newton says continued retaliatory tariffs are keeping prices from reaching their potential. Higher input costs also are cutting into profit margins.

Several Missouri commodities show promise for higher prices. Corn, wheat, rice, cotton, cattle and calves, milk and chickens all should bring more money than 2018. Unfortunately, hogs and soybeans are projected to decline, as they have been the hardest hit by tariffs from China and other countries.

Any net calculation has two sides: income and expenses. Input costs will tick up $2.2 billion this year. A key factor on this side of the ledger is a 6.6 percent projected labor cost increase. Interest expenses also are expected to jump by 3 percent. Major increases to interest rates beyond these projections would dramatically impact farm profitability.

None of these numbers are set in stone. Political shifts, weather events, trade deals and changes in the broader economy can all move the markets quickly. As farmers adjust planting decisions in response to these factors and data, profit projections will adjust in kind.

Recent rumors coming out of U.S.-China trade talks sparked hope for a resolution to the ongoing trade war. If the countries can reach an agreement, increased Chinese demand could again boost U.S. exports. This would have a positive impact on prices for many of Missouri's strongest commodities.

While this report isn’t the great news farmers hoped to hear, it does provide reason to be optimistic. If a few things could move in the right direction and the weather holds out, hopefully 2019 can be the year that Missouri farmers get back to normal prices.

Eric Bohl is director of public affairs for the Missouri Farm Bureau in Columbia. He can be reached at publicaffairs@mofb.com.

Comments

No comments on this story |
Please log in to add your comment
Editors' Pick

Open for Business: carGo Technologies LLC

Cape Girardeau-based carGo Technologies LLC launched its ride-hailing and delivery services in the Springfield market; the 90-bed, $8.7 million Lake Stockton Healthcare Facility began operating; and First Home Bank officially changed its name to Stockmens Bank.

Most Read
SBJ.net Poll
What Proposition S project are you most anticipating?

View results