Farmers can expect a challenging marketing environment for agricultural crops grown in 2023 as the global economy faces recessionary challenges, according to a Texas A&M AgriLife Extension Service grains marketing economist.
Two cotton strippers harvesting cotton in a field with several yellow plastic wrapped cotton bales “The economic challenges around the world are severe,” said Mark Welch, Ph.D., AgriLife Extension grain marketing economist, told attendees at the Texas Plant Protection Association conference.
Farmers looking to market their crops will have do so carefully amidst several challenging economic factors.
“Interest rates, inflation are all important factors,” he said. “The Federal Reserve has gotten aggressive (with interest rate hikes). Moving from near zero at the beginning of the year to 4%, increases in the federal funds rate may have dampened overall inflation. The Consumer Price Index that was 9% in June is now down just below 7%. But core inflation, less food and energy, is still stubbornly high, around 5%.”
Welch said the Federal Reserve isn’t done raising rates to try to curb inflation. He expects a quarter of a percent to a half of a percent hike in the future.
He noted there are ample number of jobs keeping the economy from revisiting the recession of the 1970s when mortgage rates were 15% to 18%. Welch said if the inflation rate can be lowered back to 2%, it’s still going to be a challenge.
“We’ve got a long, long way to go,” he said. “If we are headed to a recession in 2023, we know recessions are not good for agriculture.”
Projections of net farm income for 2023 is a $12 billion decline compared to 2022, according to the Food & Agricultural Policy Research Institute at the University of Missouri.
—Texas AgriLife