As we near the end of the first quarter of 2019, economists are releasing their predictions for agricultural income throughout the remainder of the year.
What to Expect in 2019
According to the American Farm Bureau Federation, “USDA’s first projection for net farm income in 2019 is projected at $69.4 billion, the third-lowest level over the last decade. In 2019-inflation-adjusted dollars, net farm income in 2019 is projected to be 8 percent higher than prior-year levels, representing an increase of $5.2 billion. However, in inflation-adjusted dollars, net farm income in 2019 will remain among the bottom 25 percent of all-time.”
The overall agricultural outlook is mixed with higher receipts expected for corn, wheat, rice, and in particular, fruits, nuts, and milk, while soybeans and hogs are projected to be down significantly. These latter items’ change is largely a product of the current trade situation with China.
In spite of the projections, the USDA Chief Economist Robert Johansson says, “farmer optimism is up 6.5% from this time last year.” In Food Business News, Mr. Johansson commented that “The most important issue this year will be China’s retaliatory tariffs that essentially blocked U.S. soybean exports to China, forcing sale of the oilseed at steep discounts relative to main competitor Brazil. Alternate markets are increasing, Mr. Johansson said, but not nearly enough to offset the loss of exports to China. A projected carryout of 910 million bus will ‘take 10 years to unwind,’ he said, and prices won’t fully recover until the 2020 crop year.”
The ongoing trade issues continue to be discussed by both the U.S. and China. Only time will tell how and when these talks conclude. Until then, between the weather and trade uncertainty, the agricultural outlook is challenging.
We will keep you updated as new information and projections become available throughout the year.