Today?s agricultural economy mimics that of the past five years, with a couple caveats.
One agricultural economist outlines his economic forecast, while offering best management practices for 2020.
Brent Gloy, of Ag Economic Insights, provided an update on the agricultural economy at GrowingOn, by Farm Credit Services of America. Gloy says today’s farm economy is similar to years past.
?I?m sick of giving the same outlook,? Gloy said. ?It looks like the last five years with a couple caveats. One (being) we have a trade deal with China, which I think is unequivocally good.?
China pledged to purchase $36.5 billion worth of United States agricultural products in 2020 and $43.5 billion in 2021. Gloy’s forecast does not account for colossal purchases. He believes China will fall short of its commitment. However, Gloy says that misses the point.
?The good thing is we?re trading with China again,? Gloy said. ?We didn?t have a Phase One trade deal with them in 2017, and we (sent) $27 billion of Ag exports to them. If we could get back to those levels, it would be good news for the farm economy.?
Farmers struggle to maintain working capital. Gloy speaks to a trend, which he refers to as “The Great Refinancing,” where producers borrow money to improve their financial standing.
?One way to improve our working capital is borrowing against it, and I think you?ve seen farms around the country do that. There?s nothing wrong with that. But when we do that, it?s important to think about what got us in the position we were in where we had to do that, and whether there?s something we need to fix in our farm operations, so we don?t have to do that again,” Gloy said.
