Posted on Dec 26, 2022
Drought, inflation won’t stop farm income from hitting record highs, USDA says
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High prices for products like eggs and grain are expected to lead to a record windfall for farmers this year, overcoming drought, bird flu and costly inputs. But the profit margin is thinner for small producers and those hit hard by dry conditions.
National farm income will likely reach highs not seen since 1973, according to estimates from the U.S. Department of Agriculture.
That’s despite a challenging season that stacked drought, bird flu and costly fertilizer and fuel against farmers and ranchers.
Or perhaps income is high not in spite but because of the difficult season, said American Farm Bureau Federation economist Bernt Nelson.
“This year really came with a lot of obstacles; we saw a lot of things like inflation and increased farm production expenses,” he said. “As these prices have risen, they’ve really risen because of the obstacles.”
National farm income will likely reach highs not seen since 1973, according to estimates from the U.S. Department of Agriculture.
That’s despite a challenging season that stacked drought, bird flu and costly fertilizer and fuel against farmers and ranchers.
Or perhaps income is high not in spite but because of the difficult season, said American Farm Bureau Federation economist Bernt Nelson.
“This year really came with a lot of obstacles; we saw a lot of things like inflation and increased farm production expenses,” he said. “As these prices have risen, they’ve really risen because of the obstacles.”
Drought, inflation won’t stop farm income from hitting record highs, USDA says
Posted from kcur.org
Farming
Agriculture
USDA
Income
Economics
Posted >1 y ago
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PO1 William "Chip" Nagel
..."Looking forward
Even in a time of high incomes, farm groups argue that the government needs to do more to support agriculture.
They point to the margin of profitability — prices are high, but so are inputs. They say farmers and ranchers can’t always count on exorbitant prices to balance out expenses.
“Just because we’ve had these high prices doesn’t mean everyone is profiting equally,” Nelson said. “Nor does it mean that profits will remain positive going through next year as we face things like inflation and a potentially continuing drought.”
The debate will be especially prominent in the upcoming year as Congress debates the terms of the new Farm Bill. Farm groups are pushing to raise reference prices for crop insurance programs, which they say don’t factor in high expenses.
“There’s an awful lot of downside risk before the existing safety net really kicks in,” Lubben said. “So there’s not much safety in the current safety net, so to speak.”
..."Looking forward
Even in a time of high incomes, farm groups argue that the government needs to do more to support agriculture.
They point to the margin of profitability — prices are high, but so are inputs. They say farmers and ranchers can’t always count on exorbitant prices to balance out expenses.
“Just because we’ve had these high prices doesn’t mean everyone is profiting equally,” Nelson said. “Nor does it mean that profits will remain positive going through next year as we face things like inflation and a potentially continuing drought.”
The debate will be especially prominent in the upcoming year as Congress debates the terms of the new Farm Bill. Farm groups are pushing to raise reference prices for crop insurance programs, which they say don’t factor in high expenses.
“There’s an awful lot of downside risk before the existing safety net really kicks in,” Lubben said. “So there’s not much safety in the current safety net, so to speak.”
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Doesn't this fall back on the law of "Supply & Demand"? The drought caused a shortage of essential agricultural items, thus driving prices up. The supply chain is horrible right now, takes forever to get anything, which means agriculture items are just as difficult to come by. The issue with agriculture items, they are perishable. They won't last forever, so you gotta get them when they are available.
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