Less Optimism, but Not Gloom and Doom for Ag Economy in 2024

There’s a little less optimism about the ag economy going into 2024 than heading into 2023. Chad Hart is an Iowa State University professor who says the outlook for the year isn’t entirely gloomy. He says it may be a case of things returning to normal.

“The idea is, I’m going to describe it as we’re returning to normal. When you think back to 2020, 2021, and 2022, we had some very strong years for the farm economy. And the idea is we couldn’t expect that to continue. We’ve seen our prices decline, we’re seeing things tighten up as far as profit margins are concerned, but for most commodities, I would argue we’re around breakeven, which I would argue is around normal.”

He says the ag sector does have its challenges.

“Now we’ve got our definite weak spots. Dairy has struggled hard in 2023. Pork has struggled as well, significantly. But when you’re looking at some of our crops like corn and soybeans, I’m going to argue that they’re settling back in towards prices equal production cost, which is the normal state of affairs.”

High input costs have squeezed margins in the last few years. Hart says it’s a different situation than what was considered “normal” before 2020.

“No, I’m going to argue margins are, but here’s the difference. When you think about it, what we are used to – say you go back 5-10 years ago –  yes, we would have been talking lower prices and lower costs. Now we’re talking higher prices and higher costs, so prices don’t have to fall back to where they were to create problems for us. Think of it as the profits we’ve gathered over the past few years, we’ve reinvested that back in agriculture. By that reinvestment, we have driven those input costs up to match the prices we have today.”