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Economists concerned about the state of the ag economy

A senior economist at The Federal Reserve Bank of Kansas City says the ag economy is softening.

Cortney Cowley says it all starts with farmer concern over low grain market prices.

“We’re coming off of very high levels, very strong income and so that can affect the outlook both for farm operations, agricultural lenders and then everyone else you know, down the agricultural supply chain, including ag equipment manufacturers,” she says.

Purdue University’s Jim Mintert says there are rising concerns about recent layoffs in the largest equipment manufacturers, such as John Deere, AGCO, and CNH.

“As farmers have headed into 2024 and starting to look ahead to 2025 it’s clear they’re worried about their financial situation,” he says. “One of the first things you do from a management perspective when you’re worried about your financial situation, what your future income levels are going to be, you start to pull back on capital investment.”

Cowley tells Brownfield supply chain issues during the pandemic contributed to rising costs.

“There was a lot of cash coming into the agricultural economy by way of government programs and higher commodity prices, so demand was really high at that time and has since come down from there,” she says.

She says for the economy to get better, costs need to come down.

“Really what we need to see is expenses come down some across the board for everyone,” she says. “This is both starting with farmers, but then also probably for equipment manufacturers too. That’s something that we are seeing some softening in inflation.”

John Deere has laid off about 14% of its production and maintenance jobs at three different facilities this month, citing lower earnings. AGCO recently announced layoffs of 6% of its total salary workers. This comes after both companies announced plans to move production sites to Mexico beginning in 2025.

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