Economist Warns Of A Prolonged Soft Farm Economy

Most if not all in the Ag industry would agree that 2019 was a rough year.  In fact for many, 2018 and 2017 weren’t much better.  But according to a variety of surveys and polls, many in farm country are feeling more positive about the road the Ag industry is on in 2020.  But one economist says he’s not looking at 2020, but well beyond.  Nathan Kauffman economist for the Federal Reserve said it’s not the next 12 months that have the lion share of his focus.

“Keep in mind, we’ve been in broadly speaking a downturn in the Ag economy for the past five years, and if you add another five years to that, that’s ten years time and a decade is a long time to be in an environment where it’s difficult to make investments for long term planning if you are a producer.  So I think what I would worry about is not necessarily what these pressures look like for the next year, through there are certainly places where you could see them building, I think it would be more if this continues to last.”

Kauffman said if the farm economy as a whole does not see some changes for the positive between now and 2025, stress and pressures will continue to build, requiring a much larger correction.  So, what happens if things don’t turn around in the next five years?

Kauffman had one word, consolidation.

“I think the changes over the past five years have been especially pronounced for what we would call a mid-sized operation.  They might need to decide whether they’re going to try to get large and take advantage of scale, or whether they stay small and nimble and identify opportunities.  So I think where you’ve seen some opportunities of those changes really has been in that mid-sized operation.”

And Kauffman anticipates if the farm economy does not turn around in the coming years, it will continue be the mid-sized farm that feels the greatest pressure.

If you have a story idea for the Washington Ag Network, call (509) 547-1618, or e-mail gvaagen@cherrycreekradio.com