What might impact ag producers add their bottom lines in 2024?
It’s part of the big question of how do I invest in a way that returns profitability at the end of the day.
The challenge of the higher cost of establishing yourself as a farmer and maintaining that opportunity.
We haven’t done much with respect to really expanding demand domestically. Where’s the growth going to come from? It’s likely going to come from those international markets.
I’m Ron Bain. A panel of land grant university extension experts provide their take on this year as possible top stories from an Ag Econ perspective at a grower level perspective, in this edition of Agriculture USA.
What will the top agriculture-oriented stories be for 2024? Perhaps the better question from a producer point of view is what will be the top economic factors of both concern and possibility this year? Our recent National Association of Farm Broadcasting panel discussion focused on that latter inquiry. Three Land Grant University economists and social scientists weighed in on their perspectives. Purdue University’s James Mintert is among those behind the institution’s ag economy barometer. Recent questions posed to grower participants of the barometer revealed one out of four growers made or were making operational changes associated with climate with the scope. Of changes ranging from cover crops to capital improvements, such as tiled drainage.
They’re starting to make some changes and the changes they’re making are pretty much across the board. They’re using some technology that they can purchase every winter or every crop season and they’re also looking at making some longer-term investments.
The producers’ approach to farm operation and succession planning is moving away from the concept of a family farm and board towards a family business. According to the University of Missouri’s Scott Brown, this due in part to realization that technological investment and diversification is needed
When the family members come back, they’re looking at different forms of agriculture to be their part. It’s all about risk diversification. When you look at just how volatile markets have been, technology plays a key role in that today. You cannot avoid too long investing in new technology because there’s returns to that technology.
That diversification, according to Iowa State University’s Chad Hart, includes a greater effort in direct marketing to consumers. They example of a traditional Midwest corn and soybean farm, growing produce and having an on-farm stand was driven by two daughters returning to be part of the operation.
So they had something off the farm in town and then they said even though we’re in a semi-rural part of Indiana, maybe we could get into the food delivery business as well. Over time, they’ve been able to dramatically expand the operation in terms of gross revenue.
Consumer demand continues to be an economic driver for producers regardless of commodity. Scott Brown offers that example proteins.
Understanding we’re chasing a consumer that’s changing in that we no longer go to the grocery store and look at the meat case and say is it chicken pork or beef? That’s cheapest? It’s which restaurant do I pick that tends to be that center of plate protein.
Chad Hart says the adjustment to consumer trends is not just domestic, a global as well,
The income effect as well. I would argue that’s even larger as we’re looking at those international markets. Because especially on the meat side, what we do often see is that as income growth occurs in countries, there’s a definite shift in the proteins that they’re demanding in the way that they absorb those at the same time, too. We’re trying to figure out how to deal with the different cultural practices that they have. It’s all in managing and working with that consumer.
James Mintert notes a big concern for most growers is high input cost, especially in these contexts.
Producers are concerned about a cost price squeeze, but maybe different than some prior periods is that they are way more worried about input prices than they appear to be based on the risk of lower crop and livestock prices.
Then there is the matter of an election year in 2024 mentored says producers tend to be anxious about any policy and regulation changes in the aftermath of an election, regardless of party and in turn, how to adapt to such changes. Scott Brown says that it’s due in part to the education gap about agriculture between producers and most consumers and policymakers who do not have a farm background.
They know what it means to their bottom line day in and day out if we’re going to change something regulatory-wise, those trying to put regulations in place, and this is no different than consumers or land grant universities. Those of us that have a farm background continue to dwindle in numbers. So as you address these very difficult issues, if you don’t come from farm background, I think it’s sometimes hard to understand that regulatory burden and what it really means.