Ag professor expects uneven farm income amid low crop prices

ST. LOUIS — Farming revenue will be uneven this year as crop yields plunge and livestock revenue surges, said Jason Henderson, vice president of Iowa State University Extension and Outreach..Speaking Nov. 13 during the American Bankers Association Agricultural Bankers Conference, Henderson said farmers are, generally, under stress and trimming production costs. Farm income increased to its second highest mark on record last year due to large government payments and $140 billion in market returns, Henderson said. According to the USDA, corn price forecasts are mixed for this year, with a season-average price of $4.20 per bushel as record production is expected to increase supplies and lower prices. The USDA is projecting soybean prices will fall 2 percent from last year. Meanwhile, cattle prices are expected to remain high into next year, with an 11.6 percent price increase for beef and veal this year. Farm capital investments are falling despite the competition for land remaining. Still, Henderson sees farm financials as strong, with working capital increasing at a 12.3 percent clip this year. Only 27 percent of farmers expect a worse financial performance than last year, according to the Purdue Ag Barometer.“Agriculture is still a good bet,” Henderson said. He also described the broader economic outlook. Henderson, who sees the $37 trillion in government debt as the largest economic risk, listed several ways for the debt to be reduced: Stronger economic growth; decreased spending; increased taxes on other countries through tariffs; allowing inflation to rise and monetizing the debt; and selling government land. Henderson sees the potential solutions as having bad side effects and unlikely because of their political ramifications. Another long-time factor Henderson sees for agriculture is its perception among consumers. He said it is unclear, especially as younger Americans become more removed from the concept of family farms, whether they will relate to producers or see them as affluent and out-of-touch. Henderson had several tips for bankers to support producers: Support innovation through explaining the return on investment of ag technology and value-added enterprises; explore options for alternative loan structures, risk management tools and education; and support young producers. Henderson provided an overview of the global trading market. China’s economic growth is projected to fall to 4.25 percent this year from 5.4 percent last year, and the country’s export growth to the US has fallen 25 percent. Henderson said China’s population is expected to fall nearly 3 percent over the next decade. At the same time, he called on trade relationships to be developed with emerging and developing Asia — India, Indonesia, Malaysia, Philippines, Thailand and Vietnam — which is expected to grow 4.7 percent next year, along with Africa, where 4.7 percent growth is expected.