WASHINGTON, Jan. 11, 2017 - A handful of ag economists all offered similarly gloomy pictures of the farm economy this week at the American Farm Bureau Federation’s 98th Annual Convention in Phoenix. John Newton, Farm Bureau’s director of market intelligence, said recognition of changes in the economic conditions should lead to a different way of thinking among U.S. farmers and ranchers.
“The golden age of ag income is over,” Newton said, “so we need to think about marketing decisions, finding those new customers, and recognize that price is very sensitive to supply shocks.”
Some of Newton’s colleagues expanded on some of the potential “side hustles” (with “hustle” being used to mean a side business) that producers could consider to bolster their traditional revenue streams. Maybe forming a community-supported agriculture (CSA) service or starting an agri-tourism enterprise would add a little to the bottom line, but the traditional forms of agricultural income don’t appear headed for record highs in 2017.
Pat Westhoff, director of University of Missouri’s Food and Agricultural Policy Research Institute, gave Farm Bureau members a crop sector outlook that pointed toward solid production and disappointing prices.
“We’ve got low prices across the board,” Westhoff said. “If there were a crop that had really good returns, people would be growing it, right? Things tend to move together, and that’s what we’re seeing right now, unfortunately.”
Westhoff offered projections of more than 90 million acres of corn yielding just under 14 billion bushels of production. If realized, that production would be under projections for the 2016 crop, which have been topping 15 billion bushels. Westhoff also expects a soybean harvest of about 3.9 billion bushels, a drop from the estimated 4.3 billion in 2016. He said that drop in production – spurred by a decline in yield projections – could lead to some price recovery.
More figures on 2016 production are expected from the Jan. 12 World Agricultural Supply and Demand Estimates report, the first of 2017.
Expansion is likely to continue in the protein sector, said JBS agriculture economist Karl Skold. His early-morning address at the convention jolted some attendees awake as he explained that expected expansion of the size of the nation’s cattle and hog herds wouldn’t do much to dispel price concerns in the industries.
Skold said specifically that in pork, production should be up about 3 percent, partially on the heels of increased slaughter capacity. However, he pointed out that Americans have held steady with per capita consumption of about 50 pounds of pork annually, so trade will have to absorb the extra product.
Beef will also be in a precarious place when it comes to trade in 2017 as the biggest buyer of U.S. product – Japan – trends toward taking in less of the meat. Some will point to a cushier trade relationship between Japan and Australia as a driving factor in that shift, but no matter the cause, the U.S. will have to find a new home for some of its exported beef. Skold said South Korea is showing promise as a growing market, but a collection of nations he deemed “all other” is also showing signs of growth.
The beef industry is being challenged to open new markets, and to “get people to eat one pound more, a half-pound more every year,” Skold said. Part of the challenge, he said, is to get these “other” countries, countries “that you may have never even heard of,” to start eating beef, as the big markets that the industry has been dependent upon are not expanding and their populations aren’t growing very fast.
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