Economist: Big-picture ag outlook still good
GRAND FORKS, N.D. — U.S. farmers face challenges, especially over the next two to three years, but the long-term outlook remains good, an agricultural economist said.
"All forces still point forward in ag," Matt Roberts said. "The big-picture trends are all still in the right direction. ... That prosperity will not turn around. We (U.S. ag) are in a unique position to take advantage."
Roberts spoke Feb. 21 during the first day of the two-day International Crop Expo at the Alerus Center in Grand Forks, N.D. Roughly 4,000 people and 170 exhibitors attended.
The Crop Expo — the fusion of three prior events hosted individually by small grains, potato and soybean groups after the Alerus Center opened — hosts both general educational sessions as well as ones geared to spuds, small grains and soybeans/dry beans.
Roberts began his career as a commodity broker and later served in the Office of the Chief Economist at the Commodity Futures Trading Commission in Washington, D.C. He taught economics and grain marketing at Ohio State University for 15 years before leaving to start his own consulting company in 2016.
He now speaks around the country on commodity markets, ag risk management, energy issues and biofuels.
Some Americans focus too much on the challenges our nation faces and the divisions within it. As a result, they can lose sight of the economic progress made worldwide and the growing opportunities that creates for U.S. agriculture, he said.
In the short term, however, world grain production has risen faster than demand, pushing up stocks and holding down prices. Though growing demand will cut into stocks and boost prices, "it will be two or three years before that happens," Roberts said.
Corn, soybeans and wheat, particularly hard red spring wheat, are the three major crops in the Upper Midwest, and Roberts focused much of his Grand Forks presentation on them.
Of the three, wheat has been consistently the least profitable, and that's unlikely to change, he said.
"Wheat will stay a harder market," he said, noting that there's been "No consistent growth in demand for 20 years."
Prices of hard red spring wheat, which dominates Upper Midwest wheat production, have held up relatively well, sparing producers in the area from some of the economic pain felt by farmers who raise other wheat classes, Roberts said.
Corn prices also face short-term challenges. Per-acre yields are rising faster than new demand, pushing up corn supplies and working against prices, he said.
In contrast, demand for soybeans continues to outpace per-acre gains in soybean yields, supporting bean prices, he said.
In recent years, corn gained acreage nationwide at the expense of soybean acres, as farmers hoped to take advantage of relatively attractive corn prices. Roberts predicted the next few years will bring an acreage shift from corn back to soybeans.
Trade and more
Roberts also predicted a "mild recession" and rising interest rates this year.
Even so, "Trade is the biggest worry, especially in 2018," he said.
Many in U.S. agriculture worry that ag could suffer from potential changes to the North American Free Trade Agreement and other trade pacts.
Roberts shares that concern. "Agriculture is always a target for retaliation (in trade wars)," he said.
Among his general recommendations to farmers:
• Become a better manager, paying close attention to record-keeping.
• Work with landlords to develop fair and realistic farmland rental rates.
• Be financially conservative, building working capital.
• Look for opportunities, such as organic.
• Market more of the year's crop before April 15 and sell 75-100 percent of it by harvest.