Domestic & Global Economic Outlook for Agriculture

Domestic & Global Economic Outlook for Agriculture

By Ryan Zimmerman

Farm Credit of the Virginias recently held a webinar featuring Dr. David Kohl, Professor Emeritus in the Department of Agricultural and Applied Economics at Virginia Tech. Dr. Kohl is well-known throughout the country for his wealth of knowledge related to agricultural economics on the global and domestic markets. During the webinar, he provided his insights and an outlook of what the farm economy will look like following COVID-19.

“This isn’t a financial shock, it’s a bio-shock; we will bounce back from this.”
– Dr. David M. Kohl

Depressed Commodity Markets
It’s no surprise that many aspects of our lives and our work will be different once the chaos of COVID-19 subsides. Commodity prices will be affected with corn prices dropping as ethanol uses become less relevant. Economists predict wheat and soybean prices to increase in the near future. We shouldn’t expect this to be like the recession back in 2009 where market prices followed a V-shape. Instead, it will be an elongated L-shape where the next few quarters will show a negative economic growth, with the third and fourth quarters showing a bounce back.

Surges in Buying Local
Although it seems like doom and gloom for agriculture right now, know that there are several positive outcomes expected down the road. The general public will come out of this wanting more local, safe, and reliable sources of food. Niche markets, agritourism, and farmers markets could see a post-COVID-19 boom.

Environmental Improvements
It’s expected that our soils, water, and general environment will become healthier throughout this pandemic. Deurbanization may become more prominent as people look to step away from highly populated areas with greater rates of infection.

Increased Pressure from Lawmakers
Another big thing to take from this is once we have moved out of this Bio-shock, we need to keep our legislators and policy makers in check. Farmers are well known for managing around new policy changes on a local, state, and national scale; but this could cause some lawmakers to try to push drastic changes in order to protect us from another event like this. We can’t let fear control our future decisions, that could have negative impacts in the long run. U.S. Agriculture is resilient, the U.S. farmer and his families are some of the toughest people in the world. We will bounce back from this, we will recover, and when we do we will be stronger than ever.

Things to Watch: As we transition into the spring and summer months, farmers should pay attention to factory utilization, real estate, copper prices, and the weather in the southern hemisphere – the next area predicted to be hit with a Coronavirus surge.

Stay Tuned: Maryland Farm Bureau’s newest member benefit, INTL FCStone will be holding a free market outlook webinar for members in the next few weeks. Keep an eye on your email and social media for additional details.