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Agriculture price squeeze

USDA’s chief economist says there’s a cost-price squeeze happening in agriculture.

Input costs haven’t lowered with commodity prices and Seth Meyer says it’s a sticky situation.

“We appear to be entering that phase of tighter margins. Could be another shock around the corner, always could be (and) could be an external shock. But we are moving into a narrow margin situation perhaps faster than I would’ve anticipated even in February.”

He says farmers might have to live off the last few years of good farm income.

“I’m not forecasting five years of lean times, I’m just telling you from a global supply level we’re moving into a period (where) there’s not an obvious point on the horizon where we’ll bring those margins back to where they’ve been the last several years.”

And Meyer says the crop sector is going to have a more challenging farm income environment than livestock, but that doesn’t mean there aren’t challenges in the livestock sector.

“Eggs are doing a lot of that driving, why? Because we have HPAI cutting supplies in a pretty inelastic market. If we had more beef and beef producers had confidence and didn’t have as much concern about interest rates, we might have more beef to sell. We could sell the beef if we had it, but there’s a challenging environment.”

Brownfield interviewed Meyer during the Ag Outlook Forum in Kansas City,