Ag's long-term trends: USDA looks ahead to 2029
The USDA offers a big-picture guess on what the coming decade will bring for U.S. farmers and ranchers.
The U.S. Department of Agriculture says it doesn't have a crystal ball. But the Ag Department is offering this big-picture guess on what the coming decade will bring for U.S. farmers and ranchers:
Generally more of the same conditions that American agriculturalists face now, including relatively low crop prices and a declining share of global ag exports.
The latter reflects "growing competition to meet export demand in global markets," said Frayne Olson, crops economist/marketing specialist with North Dakota State University Extension.
Though U.S. farmers are the most efficient in the world today — producing the most per acre — they aren't necessarily the cheapest producers. Further, competitors overall are becoming more efficient, increasing their ability to win export sales, Olson said
USDA says the report, USDA Agriculture Projections to 2029 , "is not a USDA forecast about the future, but a conditional, long-run scenario" about what will happen if current farm legislation continues and certain assumptions are met.
Among the key assumptions of the report: The 2018 Farm Bill, the centerpiece of U.S. food and ag policy, will remain in place through 2029, and that ongoing trade disputes with China, a huge customer for U.S. ag exports, will continue.
It's important to note that the report was prepared in 2019 before the China phase one agreement, the U.S.-Mexico-Canada Agreement and the Japan free trade agreement were approved, USDA stressed.
Among the report's predictions for the coming decade:
- Prices for most crops will remain relatively low, but will rise slowly over the 10-year period.
- Relatively low feed prices and efficiency gains will provide incentive for livestock operators to expand.
- Though U.S. ag exports will rise slowly, the U.S. share of global markets will decline. That partly reflects the continued strength of the U.S. dollar, which makes U.S. products more expensive for foreign customers.
- Crude oil prices will rise, though advances in drilling technology will limit how much oil goes up in price.
- Corn use for ethanol will increase, with higher ethanol exports accounting for the increase.
- Net farm income will fall in the short term, but increase later. It's expected to end 2029 $4.7 billion higher than in 2020.
As for the Upper Midwest's three major crops, corn, wheat and soybeans, the report offered these predictions, among others:
- Corn production is expected to grow, mainly from yield gains but also from an increase in planted acres.
- U.S. planted wheat acreage will range from 45 million to 46.5 million annually, below the recent five-year average of 48.8 million.
- U.S. soybean acreage, which dropped in 2019, will rebound and then remain relatively steady.
Olson, who studied the agricultural trade components of the 108-page report, said he was surprised by a few of its individual conclusions — for example, it predicts U.S. corn exports to Mexico will rise faster than he had anticipated. Overall, however, he thought it generally was on target.