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Recovering economy has implications for agriculture

An ag economist at Purdue University says the coronavirus pandemic sparked one of the sharpest economic contractions in history.

Jason Henderson, senior associate dean of the Purdue college of agriculture and director of Purdue Extension, says there are solid economic fundamentals to spur a recovery, but it won’t happen quickly.  

He says there are three policy areas to watch.

“You have to watch monetary policy, and this is really about interest rates and what’s going to happen going forward in terms of an interest rate policy,” he says. “Farmers are asset rich and cash poor and low interest rates underpin asset values and reduce debt service.”

Henderson says trade and farm policy should be top of mind.

“New rules to the game of trade—is that what we’re going to be facing or what does the dynamic look like,” he says. “And finally farm policy—will it offset bad outcomes for trade for agriculture because I think trade policy for the US will be driven by intellectual property rights and all of these things that are outside of agriculture and agriculture gets the impacts.”  

Henderson says the recovery to the macro economy has implications for agriculture’s ability to recover. Managing risk during a rising interest rate environment will be critical. And Henderson says some ways to do that include monitoring technology and consumer trends as they continue to impact food, agriculture, and energy.

Henderson made these comments during the Purdue University Top Farmer Conference.

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