Ag economy. Have two words ever been gloomier in rural America than they’ve been for the last several years? Well, we’ve had a bit of a turnaround, but my assignment was to find out not only the current state but what might be ahead in the future.
So, I gave Dave Widmar of Agricultural Economic Insights in West Lafayette, Indiana, a call to find out more about the ag economy. He has more than enough experience to make a rational judgment. Before launching out on his own, Dave was a researcher in the Economics Department at Purdue University, as well as the economist for the Kansas Department of Agriculture.
The first thing he told me was that the ag economy turned around quickly. “Not only is it a big difference from 2020 to 2021, but the turnaround also took place in a short period of time,” he said on the phone from his Indiana office. “Last summer, the outlook was very bleak, and it was hard to put together a list of positive things going on.
“Now, just past the midpoint of 2021, we have a very strong outlook with a long list of positive things going for us,” he added. “The biggest piece is higher commodity prices, which have really turned around.”
That turnaround didn’t start until last September, and it has played out quickly over the past several months. That rise in commodity prices has been especially good for corn and soybean producers.
While it’s not as true as it was earlier in 2021, another thing the ag economy and farmers were benefitting from was a low-cost environment. “Over the last six months, fertilizer went from about $9 an acre in the fall of 2020 to between $130 and $140 an acre today,” Widmar says. “Farmland values and cash rental rates have increased as well. But it’s important to recognize that last year and early in 2021, the lower cost structure helped profitability.”
Here’s the rest of the conversation: