Agriculture faces a handful of issues in 2023, according to the American Farm Bureau Federation. During a panel discussion at the AFBF Annual Convention in Puerto Rico, AFBF Chief Economist Roger Cryan told attendees that global food security is rising.
“After decades of improvement in food security around the world we’ve got growing numbers of folks who not really finding it easy to feed themselves and their family, there’s been a big bump about 200 million more people were food insecure in the world in 2021 then there were three or four years before that, and there’s a lot of things behind that.”
After 40 years of good fortune, Cryan says there are many challenges in 2023.
“The fall of the Soviet Union opened up markets in those former Soviet republics. The same Soviet Union that couldn’t feed itself and had to buy grain from the US in the 70s, now Russia and Ukraine are two of the world’s bread baskets. We’ve got continuing benefits from the Green Revolution and biotech and precision ag. We’ve had benefits, enormous benefits from the expansion of free trade, that allows folks to do what they do best. We’ve had stable growth and stable inflation and we’ve had a lot of peace and now we’ve got a lot of challenges.”
Cryan says the Russia-Ukraine war is one of the bigger challenges, among others.
“War has hit us in a very tough spot in terms of world food supplies because not only of have been grains cut off and production will be down in Ukraine next year, fertilizer supplies from those parts of the world have also been cut off. There’s been a move away from free markets in places like China and Russia. We’re falling behind on free trade. Free trade is no longer popular. We have perceived environmental challenges and real environmental challenges. We have a growing population and not only is the population growing but they demand a better diet, and we have rising farm input costs.”
And inflation and interest rates are another challenge facing the economy and agriculture.
“We are facing the highest inflation we’ve faced in 40 years. That was all because the Federal Reserve Bank chose to stimulate demand in the economy where supply was the issue, and now they’re trying to deal with it by raising interest rates. These interest rates that the Fed sets really have a big impact on short term interest rates, which raises the cost of operating loans and so forth, but also the combination of rising inflation and the higher short term interest rates has contributed to higher long term interest rates. Hopefully these have already peaked, but all that is promising some problems. In 2023 and 2024 we’ll be talking about the cost of credit and 2025 and beyond, we’ll be talking about the burden of debt.”
Still, there are positives for farmers and ranchers. U.S. agriculture, facing record production costs, also enjoys record farm income. AFBF advises farmers to plan, know your break-even points, manage controllable variables and preserve working capital.