USDA Expects Strong Farm Economy in 2023

USDA’s Chief Economist, Seth Meyer, says the ag economy remains strong, but volatility will likely continue through 2023. 

According to Meyer, there’s been an increase in farm income despite tighter margins. “Again, I don’t think it reduces the anxiety that now as I start buying inputs and planning for next year’s crops, input prices remain very, very high. We’ve got a lot of volatility on output prices, but can we sustain these levels of output prices?”

Meyer believes there is some price support in the commodity markets for next season, which might help offset inputs. “We’ve seen input prices surge and, so far, output prices have kept in line. But again, that remains an area of concern going forward to the next crop in terms of a return squeeze.”

Editor’s Take:

USDA spends a lot of time and invests heavily in forecasting models that help them predict what will happen to prices and income at the farm level. Why? Because they have policy decisions to make and many programs that depend on such numbers to trigger payments or loans. Thus, when USDA states that 2023 will be another strong year for farm income – we listen. Interpretation – the U.S. economy is clearly headed into a deeper recession with the Federal Reserve raising rates to bring inflation under control. The farm economy is experiencing very good economic and financial times by comparison. If you are going to target a customer group, we strongly suggest that it be farmers and ranchers! Right now, they are your most solid and best bet in our opinion.