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Ag production costs and demand pressures are mounting

A leading ag economist says production and demand pressures are mounting for ag producers.

The University of Missouri’s Scott Brown said disposable consumer income growth will be nearly flat this year while spending has increased around 10 percent.

“How are we doing that? It’s credit cards, it’s taking on debt; those things can’t continue forever,” he said. “And if U.S. consumers have less money in their pockets, do they consume less food, do they consume less ag products?”

Meanwhile, he said skyrocketing producer costs are making production less stable.

“Think about our producers who are planting a crop that takes months or animals that take years and all of a sudden, in a period of six months, you see crude oil prices that are $50 – $60 a barrel higher,” Brown said. “You can’t plan appropriately for that kind of risk or that kind of volatility.”

IHS Markit’s U.S. income expectations have also lowered in the last six months which Brown says likely has repercussions for agriculture.

Brown presented to the Missouri Senate Agriculture Committee Wednesday.

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