Agâ€™s Seen the Best of Times, Economist Says Decline Likely Coming
American Farm Bureau Federation Chief Economist Bob Young told farmers in Montana this week that farming’s best days may soon be behind it. Young said market growth for U.S. agriculture has been unprecedented with farm income value rising from 275-billion dollars to 425-billion dollars since 2003. Whatever goes up like that - Young said is more than likely going to move the other way sooner or later. He said conditions are now right for that growth to decline - with corn demand waning and China’s appetite for U.S. export crops like soybeans tapering off. Young noted rising corn demand was the tied that raised demand and prices for grains like barley and wheat. Now corn-for-fuel demand is softening because the demand for gasoline has softened. While corn demand is still there - Young said demand growth has stopped - which means the price won’t stay high. Then there’s China’s demand for soybeans - which increased 40-billion metric tons in the last decade. Young said growth for the next 10 years is half as much - so the momentum previously driving prices is slowing. Lastly - Young pointed to interest rates that are likely to rise from current historically low levels. He said that will likely drive land prices down. Historically low debt ratios - Young said - are working in favor of farmers. He said farms as a whole are in the best financial shape they’ve ever been. Looking forward - Young said the farmers who don’t borrow heavily are most likely to weather whatever comes next.