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May 2, 2022
Having farmed for three decades in the Midwest and been involved in agriculture for another two, I have never witnessed the current heightened level of uncertainties in production ag. Every new growing season brings the normal unknowns to it. What will the weather be from planting to harvest? Where are grain prices headed? What are the new farm programs or crop insurance details? Farmers also deal with changing cash rental rates, trying to secure new farms to operate, and keeping their equipment running. Both vendors and the ag industry deal with seasonality issues and logistics. The challenges for producers and the industry would change somewhat from year to year, but this is a basic list.
For 2022, there are more uncertainties all at one time than ever facing farmers, landowners, and the ag industry. There are a number of very large uncertainties staring agriculture in the face this year. Supply chain issues, never experienced to this degree before, have created uncertainties in product availability, technology deployment, exports, processing, equipment repairs, and more. The Ukrainian War has thrown in a multitude of additional uncertainties for food and ag that have not been seen in decades. How to handle rising input costs for fuel, fertilizer, and others has created more uncertainty than usual for producers. Grain prices are at historic levels but will they go higher or lower during the growing season? Inflation has sprung into everyone's concern after being mostly absent for decades. Interest rate direction will also impact agriculture.
In addition to the above uncertainties leading into the 2022 growing season, the US is facing extreme weather conditions this spring. On top of being too wet in the east and a spreading drought in the west, the planting season is off to a slow start due to the additional challenge of colder spring weather. Uncertainty abounds for the planting of spring crops let alone the worry of summer rainfall and heat potential. Weather uncertainties are a given in agriculture, but more pressure than usual is on the production of large grain and oilseed crops due to heightened demand, world food shortage concerns, and trade disruptions from the Ukrainian War.
As we are well aware today, anything can change at a moment's notice with the weather, world events, government actions, and everything else in between. Agriculture has more unknowns or uncertainties confronting it than usual this year, but one or more of these can change on a dime. Despite the uncertainties, it is generally accepted during times like these that farmland is traditionally a safe, secure, long-term investment. Stay tuned to see how the uncertainties of 2022 unfold and affect the land market.
Senior Vice President - Real Estate Operations
|Category: Agricultural Real Estate News|