View from the Cab: Interesting times

By Kent Casson

These are certainly interesting times we are in for agriculture.

While yield prospects appear to be decent with timely rain this summer for most areas, is that enough to make up for tanking crop prices?  Any time the price of corn dips below $4.00 in today’s world is concerning and we all know cash prices have dropped below that.

Yields may be there, but things just don’t pencil out on the farm. Input costs are fairly high and several growers spent more on fungicide and insecticide applications this season. If you throw in an unexpected repair or two, the financial situation becomes concerning. Farmers have less balance sheet resiliency as they face economic loss in the face of dropping commodity prices.

Some companies claim 300-plus bushel corn is achievable. Let’s hope that is right as we will need every bit of it this year even though corn in the 200s is pretty common around our neck of the woods. I am holding out hope for soybeans as we are receiving quite a few rain showers and the beans look excellent out there.

According to Agricultural Economic Insights economists, more non-real estate debt was utilized by farmers in early 2024. During the first quarter of the year, the total non-real estate debt was 14 percent higher than the previous year. Also, non-real estate loans jumped at the fastest rate in about 50 years. The late 70s was the last time this non-farm real estate debt jumped so much. Of course, these higher debt levels mean bigger interest expenses.

Meanwhile, USDA reports 2023 farm production expenditures in the country were at $481.9 billion up from $452.5 billion the year prior. The largest expenditures include feed, livestock, poultry, farm services and labor. On average, operations paid more than $40,000 on feed and almost $30,000 on livestock, poultry and similar expenses. Farm services cost about $28,800 and labor at over $25,000.

Diesel was the largest component for fuel expenses at just under $11 billion but diesel expenditures were down over four percent from 2022. Gas expenditures were at $2.8 billion, down 5.7 percent from the previous year and LP gas was at $1.8 billion.

The ag economy is worth watching especially as we move through the rest of the year and embark on another harvest season. Will we over produce this year and end up with excess supply and tanking prices?  Time will tell.