--- title: How Do You Know When Agriculture is in a Recession? description: Agriculture can sometimes act as a buffer during broader economic recessions, as demand for essential food items tends to remain image: https://air.certifiedagdealer.com/hubfs/Farmscene%20-%20farmstead%20white%20house%20%26%20garage%20fence%20open%20fields%20behind-1.png --- [![](https://44184668.fs1.hubspotusercontent-na1.net/hubfs/44184668/Site%20Assets/Triangle-1-blue.png)View All ](https://air.certifiedagdealer.com/all) # How Do You Know When Agriculture is in a Recession? Sep 9, 2024 ![](https://air.certifiedagdealer.com/hubfs/Farmscene%20-%20farmstead%20white%20house%20%26%20garage%20fence%20open%20fields%20behind-1.png) Agriculture can sometimes act as a buffer during broader economic recessions, as demand for essential food items tends to remain relatively stable. However, when multiple indicators align, it can signal a recession in the agricultural sector. According to analysts and economists, pay particular attention to the following: 1. **Declining farm income.  **A significant drop in net farm income is a major sign. For example, USDA forecasts another major decline in farm income for 2024, on top of the big decline in 2023. That would be the largest ever two-year decline. 2. **Sharply declining commodity prices.  **Weak prices for major crops and livestock products can indicate economic trouble for farmers. Crop prices have seen sharply declining prices, with the meat sector showing continued strength. 3. **Elevated input price costs.  **When input costs, such as fertilizer, fuel and labor remain elevated while commodity prices fall, it squeezes farm profitability. 4. **Reduced agricultural exports.  **Slowing exports and a growing trade deficit in agriculture can signal economic challenges. USDA forecasts the third straight year of a U.S. ag trade deficit in the fiscal year 2025 at $42.5 billion. 5. **Debt vs. cash flow.  **Increasing farm debt relative to cash flow combined with higher borrowing costs due to interest rate increases can strain farm finances. 6. **Weakening credit conditions.  **Lower repayment rates on farm loans and increased loan renewals/extensions can indicate financial stress. 7. **Declining demand for agricultural products.  **Reduced consumer spending on discretionary food items during broader economic recessions can impact certain agricultural sectors. 8. **Falling farmland values.  **Higher interest rates and lower farm profitability can lead to downward pressure on land prices. 9. **Increased inventory levels.  **Growing stockpiles of crops and livestock products can spur further price declines. 10. **Widespread financial stress.  **When a large number of farmers across different regions and commodity sectors experience financial difficulties simultaneously it can point to an industry-wide recession. EDITOR’S TAKE: As we recently reported, ag economists are pretty evenly divided on whether ag is in a recession or not. Using this list perhaps you can be the judge of what is happening in ag in your area. If I paint with a larger brush, there are several of the indicators that might point to a recession. That said, there are more indicators that do not point to a recession in my opinion. For instance, I would make the case that input prices are declining; ag exports are picking up again; overall debt is low; farmland values remain strong, thus, making balance sheets stronger; and we are not seeing signs of widespread financial stress. Therefore, I rest my case and ask what is your opinion? All that said, it is always a good time to get farmers and ranchers into your dealership with those pre-harvest tune up and oil change special offers. Better yet, if you have a mobile unit, take your service and parts to them. Either way, help them prepare for what is arguably the busiest time of the year for agriculture! 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