Overall farm economic outlook remains strong but uncertainty lies ahead
The overall U.S. farm economy continues its recovery, but an ag economist says there are too many unknowns to forecast how long it will last.
Nathan Kauffman with the Federal Reserve Bank of Kansas City says the recent market run-ups have helped fuel the rebound, but current high prices are not sustainable. “There will be a response in production. Demand will come back to something closer to an equilibrium out of the pandemic,” he says. “What that means is a retreat back to some price level that feels more historically normal relative to where we are right now.”
Kauffman says other factors influencing the long-term economic outlook are COVID-19 uncertainties, tax policy and the livestock industry.
He says the demand for livestock products remains relatively low compared to pre COVDI-19 levels. “We are still not seeing restaurant and food service activity to the extent of what it would have been prior to the pandemic, and still disruptions and supply chain challenges connected to that,” he says. “It is going to be important to think about longer term demand and other pressures in livestock that might come from other places.”
Kauffman made his comments Thursday during webinar hosted by the University of Nebraska-Lincoln on economic recovery in the U.S. ag industry.