Covington Anticipates Additional Challenges For Growers In 2023
The past couple of years have been fairly good for farm country, financially speaking. But will that trend continue into the future?
That was one of the hot topics at the 70th Annual American Bankers Association Ag Bankers Conference. Curt Covington, former Chair of the ABA Ag Bankers Committee said when compared to 2022, he expects 2023 to be a challenge. One of the biggest issues he sees on the horizon, margin squeeze.
“I don't see many of these oil-based input costs necessarily coming down anytime soon, and I mean whether that be fertilizer, fuel, diesel, whatever that might be transportation cost. And on top of that I think labor as well is going to stay relatively expensive. So, the bottom line is farmers can only control one thing and their business and that's those expenses that they have control they can't control the revenue. So, they've got to be great managers of expenses but i think margin compression is going to be the story starting in later on in 2023.”
Covington said when it comes to 2024, he thinks a lot of things will be fixed in the U.S. economy.
“You're already seeing it today that the supply chain issues are starting to kind of soften, transportation issues are starting to get a little bit better, the ports are opening up, you can find trucks and truckers right I mean you got to have both, and ultimately, I think we get to the point where we start fixing the stock use ratios and many of these commodities," Covington continued. "So what does that tell me? Top line revenue starts dipping, costs continue to, I think escalate a bit, or at least stay high, and so I think you come into 2024 and I think it's going to be one of those years we're going to be looking back at 2022 and saying how much we really miss it.”
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