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Best of NAMA 2024












FARM JOURNAL POLL FINDS MOST AG ECONOMISTS THINK INDUSTRY IS IN RECESSION


by Tyne Morgan, Farm Journal

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."

To read the entire report click here.


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