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Farmers could see a plateau in the next decade

Farmers could see a plateau in farm income over the next decade.

Purdue Extension Director Jason Henderson says this is part of the traditional agriculture cycle.

“Traditionally, we go up in terms of a boom, we hit a downturn, and then we usually get a decade of a long plateau in terms of profitability,” he says.

He says the thin profit margins may lead farmers to consolidate or diversify their operations.  

“When you get in these time frames of thin profit margins, a lot of farmers sharpen their pencils and try to figure out how to reduce their costs,” he says. “One way to reduce your costs is to get larger and spread your fixed cost over more acres so they consolidate. The second thing they do is they look to diversify- are there other types of crops that we could produce or other types of livestock ventures that will bring profitability. The third thing they do is look for other income sources with off-farm jobs.”  

Henderson says downturns in the past have ended when there is a new source of demand. He says growing markets in other countries like India could help as well as looking at other sources of demand like value-added products.

Henderson spoke to reporters at the Ag Policy Form by Indiana Corn Growers Association and Indiana Soybean Alliance.