In this episode of Farm Equipment's Thought Leader Series, Associate Research Editor Ben Thorpe sits down with Ken Zuckerberg, lead economist and sector strategist for grains and farm Inputs at CoBank.
Inflation-adjusted U.S. net cash farm income (NCFI), defined as gross cash income less cash expenses, is forecast to increase $4 billion (3.6%) to $115.2 billion in 2020.
Back in February, the U.S. Department of Agriculture (USDA) was projecting a $3.1 billion increase in net farm income this year. Then COVID-19 emerged. Now, a private forecast from the Food & Agriculture Policy Research Institute estimates farm income to drop roughly 11% from the USDA's original projection.
Most of the dealers and others I’ve spoken with or heard from in the past couple of months seem to agree — 2019 was a weird year. It was hard to get a fix on what was going on and very little was “typical.” There are more variables than usual, I think.
The outlook for 2018 farm net income varies depending on recent reports from USDA on Aug. 30 and University of Missouri’s Food and Agricultural Policy Research Institute (FAPRI) on Sept. 18.
Farm equipment sales history is replete with hills and valleys and we certainly are in a valley now. Traditionally, the range between the hilltop and the valley floor is about 20% in terms of unit sales.
While farm cash receipts is a good indicator of farmers’ ability to invest in new ag machinery, it’s usually net farm income that tells them to pull the trigger on equipment and other capital purchases.
Supply and demand is alive and well in the U.S. agricultural economy. Harvest of U.S. crops has begun and brings with it a great expectation of a record yields. Like a huge seesaw, high demand for a commodity elevates the prices customers are willing to pay for that product and when there is an excess worldwide inventory, prices fall to meet the slowing demand.
Supply and demand is alive and well in the U.S. agricultural economy. Harvest of U.S. crops has begun and brings with it a great expectation of a record yields. Like a huge seesaw, high demand for a commodity elevates the prices customers are willing to pay for that product and when there is an excess worldwide inventory, prices fall to meet the slowing demand.
Each time that Farm Equipment surveys dealers used equipment continues to be among their biggest worries. The past effects of Section 179 Bonus Depreciation has filled dealer's lots with a large number of relatively new, low hour tractors, combines and other equipment and these units have had an effect upon the sale of new equipment.
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