An economist once joked that the future to economists is always straight lines. The economist was making light of projections which show future prices, income, or other economic data as straight lines absent the variation and volatility inherent in the economy. Yet despite this drawback, long-term projections can provide insights into underlying trends evident in the economy.
To this end, each year the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri develops a set of 10-year baseline projections for U.S. agricultural markets, farm program spending, farm income and a variety of other indicators. FAPRI recently released its latest projections. The projections assume the 2018 Farm Bill is in place and the tariffs imposed on U.S. farm products by China and other countries remain in effect.
The FAPRI projections unfortunately show the pressure on farm finances will likely continue. U.S. net farm income is projected to be increase this year, but over the long-term, the projections suggest little change in real net farm income. Other projections include:
- Soybean prices remain flat at levels below those that would otherwise prevail if foreign tariffs were removed. Corn prices are expected to remain relatively flat while production and exports will grow slowly.
- Acres in corn production are projected to exceed soybean acres for the foreseeable future.
- Meat production is expected to increase, although at a slower pace beginning next year.
- Exports of pork and chicken will increase over time, but beef exports will trend lower.
- Beef cow numbers are expected to decline over the decade after reaching a high this year.
- Cattle prices are expected to slowly rise but remain well below the highs seen in 2014 and 2015.
- Oil prices are expected to dip this year, then slowly climb higher through 2028.
- Higher fuel prices and other inputs result in a 1.5 percent annual increase in farm input prices through 2028.