Key trends impacting the farm economy

There was a lot of agricultural exuberance in 2021. The combination of lower production costs and higher crop prices meant strong profits in the farm economy. It was a good price year for most crops including corn, soybeans, wheat and cotton.

Brent Gloy is a partner with Agricultural Economic Insights and says he’s cautiously optimistic for 2022. Factors such as higher input costs and the ability to get product to producers will be an issue in the spring and something to keep a watch on. 

"The other thing we’re watching, what we look at as a big risk is, I don’t want to say irrational exuberance but exuberance in the farm sector. I mean everything you go to right now is high whether it be farmland or inputs or labor problems on the farm, whatever it might be," says Gloy. "It’s a good sign that people are making money, but at the same time it’s a little bit nervous because our cost structure is really going to elevate."

He says as we go into the unknowns of 2022 it’s important to really understand your cost structure.

"Understand your accounting costs, your economic costs, your cash flow costs. Understand where prices are at today and maybe get some of that product sold at a price that you can make money at. I know that you’re not going to make as much money right now as you would from 2021, but that’s in the books and it’s a new environment now," he says. "So, they really need to pay attention to their costs." 

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