2023 shaping up to be a volatile one for farmers
SAN JUAN, PUERTO RICO—For farmers, the new year is ushering in some volatility.
“Global food insecurity is rising,” noted Roger Cryan, chief economist for American Farm Bureau Federation. “There are a number of folks finding it difficult to feed their families,” he said Jan. 9 during a workshop titled “Top Market Issues to Watch for in 2023” at the AFBF annual convention.
“For 40 years we’ve had good fortune in feeding the world,” Cryan told a crowded room of farmers in attendance.
But the 40 years of feeding the world has changed. Cryan said Russia’s invasion of Ukraine has led to food supply issues. Additionally, there is a growing global population that demands a better diet, and U.S. farmers’ input costs have risen significantly.
U.S. inflation is the highest it’s been in 40 years, he added. Inflation led to the government raising interest rates, Cryan explained, and farmers are struggling to pay high-interest loans for their land and equipment. High interest rates also decrease the value of farmland, which is often collateral farmers use to obtain loans in the first place.
Additionally, there are ongoing trade disputes that are disrupting free trade.
Veronica Nigh, AFBF senior economist, said tariffs that escalated in 2018-2019 “are still hanging around.”
She added that export bans also are starting to pop up again. Mexico has banned genetically engineered corn, and the U.S. can’t produce enough non-GM corn to meet that country’s demand for it.
Additionally, countries are arbitrarily deciding who they will trade with. “The old tried-and-true animosity is still there,” Nigh commented during the workshop.
She cited the Russian invasion of Ukraine as an example. In February 2022 after Russia attacked Ukraine, it issued a list of countries it deemed “unfriendly,” which included Ukraine, Canada, European Union countries and the U.S. Brazil, however, was not on the list.
“Brazil is now turning shipments of fertilizer away, and we can’t get enough here,” Nigh said. And the U.S. is a “huge participant” in global fertilizer markets.
“We’re going to continue to see volatility in 2023,” she concluded. “As long as the war continues, a spike in energy products will persist.”