Farmers are facing a reality that’s gripping the majority of agriculture today.
“The price of corn seems to be still in that downward trend,” said Joe Shirbroun, Farmersburg, Iowa farmer.
Lower prices aren’t budging to finishing out 2017. Ag economists like Jackson Takach of Farmer Mac are watching the price situation closely, as 2018 may play out to be more of the same.
“I think we’re going to have to sustain a few more years of the current economics,” said Takach. “I think this year and 2019 there’s probably not enough to move the needle. There’s not going to be enough demand over the next two years to eat up all the supplies. We have record stocks for both corn, soybeans and wheat. It’s going to take a few more years to churn that out.”
Purdue and the Chicago Mercantile Exchange (CME) team up to produce a monthly ag economy barometer. This year it showed a slump in farmers’ moods. After peaking at 153 to kick off 2017, farmers sentiments slid nearly 30 points, remaining in that range to finish out the year.
“As we wrap up the year 2017 and look back in agriculture, it was a year of continued adjustment,” said Chris Hurt, an economist at Purdue University. “When we talk about continued adjustment, I think everybody in U.S. agriculture knows that we’ve been through a boom cycle followed by a moderation cycle.”
Hurt says despite net farm income projected to improve slightly in 2017, overall net farm income has dropped 40 percent from the highs farmers saw between 2011 and 2014. This year he coined as a “year of adjustment,” with farmers trying to realign operations to face the realities of lower prices.
“We’ve also seen adjustments in 2017 in the animal industry,” said Hurt. “Once feed prices dropped, we’ve seen very strong profitability for the animal sector, and that profitability has meant expansion of the livestock sector by rebuilding the reduced production we had from about 2007 to 2014.”
Even with a better picture for livestock overall cash flows remain tight.
“Farm families have turned to their lenders and they continue to do that in 2017 to help bridge the cash flow and income gap that we’re seeing at this point,” said Hurt.
Hurt says in order to look forward, agriculture needs to take a hard look at the past. That includes the 1970s and 1980s, as that was the last major boom and bust cycle in agriculture.
“As we look back to historical boom and moderation cycles we see have some…