The latest Ag Economy Barometer shows financial concerns are still top of mind for many producers across the United States.
The Kansas Ag Bankers held their Conference this week. Dr. David Kohl, an ag economist with Virginia Tech, spoke about the future of agriculture and the challenges ahead.
“I think one of the things that we’re going to see in ’24 and ’25 is extremes and volatility, prices, cost possibly interest rates, because we’re going through a geopolitical environment, where I mentioned half of the world population is going through a major election. So it’s going to place trade, sanctions, and tariffs kind of in our state of ball of confusion to say the least. The other element that we’re seeing, we’re coming into a period like 2013 to 2020 in that period, price has declined. However, cost stayed low and interest rates stayed low. This time, this period is going to be higher cost and higher interest rates, so we’re going to see the margin extreme, squeeze extreme, and then extremes in volatility. So whether it’s the producer or the bank, they’re going to have to have their A-game. We’re going into the playoffs and one of the things that’s very, very important is to focus on basics and fundamentals because that will get you through the noise, and so that is the message that I have and you’ll see a widening gap of profitability of these certain producers that step up to the plate do okay, the other producers, they’re probably going to struggle not only financially, but possibly mentally.”
Dr. Kohl says ag lenders should urge their customers to watch global geo-political events for any indicators directly affecting the ag economy.
