The market outlook for agriculture in the near future has room for optimism, but there are plenty of uncertain issues moving forward, according to the USDA chief economist Seth Meyer.
In the unofficial kickoff to the 2023 growing season, the USDA convened in Arlington, Virginia, for the 99th annual Agricultural Outlook Forum Feb. 23-24, with prominent members of the industry giving their takes on what the future looks like in world of agriculture.
“This is a pivotal moment for American agriculture,” USDA Secretary Tom Vilsack said at the event. “In my lifetime, the productivity of American farmers has improved by 17 times. It’s truly a remarkable story of innovation. So, it makes sense that the topic of this particular outlook forum would be ‘Seeds of Growth,’ a continuation of that tradition.”
However, that productivity has come at a cost, Vilsack said, and he meant that quite literally as he talked about the increasing prices to put a crop in the ground. That has driven a focus on larger farm operations with fewer farmers overall. He referenced the impacts that COVID and inflation have had on the economy, but there is reason for optimism.
“Seth’s report today suggests maybe we won’t set a record (profit) this year, but we’ll have income that is better than average, better than historical average,” Vilsack said. “In fact, the last couple years have beat the historical average by as much as 50%. Record income.”
However, Vilsack said the income was not equal in agriculture. He claimed nearly 50% of farmers in America had negative farm income over the last several years and 40% who were profitable made a majority of their income from off-farm jobs.
“I think we have to ask ourselves a serious question,” Vilsack said. “About whether we want a system that continues to see further consolidation and the impact that that has on farmers and on rural communities or whether we’re innovative enough to figure out a new way, a different way, an expanded opportunity.”
Meyer unveiled the new estimates for acreage in the U.S. for 2023 at the Ag Outlook Forum. Corn acreage is expected to rise 2.7% to 91.0 million, which would be the second highest mark in the past five years. Soybeans are expected to remain steady with 2022’s mark of 87.5 million acres on pace with the past few years. Wheat acres are expected to rise 8.2% to 49.5 million nationally, with rice and sorghum each seeing increases. Cotton was the only commodity to have a forecast decrease in acres, dropping from 13.8 million in 2022 to 10.9 million in 2023.
In terms of markets, changes in how the market operates was one of the first issues Meyer touched on in regards to volatility.
“Over the last two years, where we have been operating virtually, we’ve seen lots of changes in agricultural markets for lots of different reasons,” Meyer said. “We saw prices start to rise all the way back in the fall of 2020, and as demand picked up, we had short crops around the world. We had COVID, we had war in Ukraine and we’ve seen a tremendous amount of volatility and as we work our way through this.”
That has caused stress among those who are reliant on the markets for their well-being. Meyer pointed out that farm income was “really quite good” in 2022, but it came with a lot of anxiety and turbulence. Part of that volatility has come from tight stocks in corn, soybeans, rice and wheat.
“The market is very sensitive to issues of war or short crops and so, that’s why we’ve seen a tremendous amount of volatility,” he said.
Adding to market uncertainty, China is now accepting Brazilian corn and other countries are starting to emerge as major producers, Meyer pointed out.
“We have a new, large competitor in the export market into China,” he said. “And we’ve seen the Australians have a record wheat crop three years in a row because of La Niña.”