Economist: U.S. Ag Economy Looks Uncertain Heading Into 2025

To say 2024 has been challenging for farmers and the agricultural sector may be an understatement.

“It has been interesting, lots of unexpected turns and uncertainty, and it's going to set us up for even more uncertainty and surprises into 2025," noted Dave Widmar, economist and managing partner with Agricultural Economic Insights.  "It's a farm economy with two outlooks, and one outlook is on the livestock side, especially cow-calf producers. They're having a pretty strong year when we look at net farm income and the net farm come estimates coming out of USDA, and then the other side of that coin is crop producers, and especially corn and soybeans. In the Midwest, they're having a really difficult year. So, we sort of have an economy that's hitting the brakes on one side and hitting the gas on the other side. So, I think that's going to take a lot of time to move through, to navigate through.”

Widmar noted the U.S. economy has changed overall.

“I think we've also seen a change in the macro economy. You have a situation where the Fed's now starting to lower interest rates a little bit. So, we've seen a lot of that inflation uncertainty and inflation concern start to leave, so we'll see how that resolves itself into 2025.”

While lower interest rates are a good thing, Widmar said it’ll take a while before the Ag economy notices an economic impact.

“We went from 3.5-4% farm-level interest rates up to 7-7.5%, and now we're coming down from 7.5% to maybe 6.5%. We'll start to see some improvement, but we went up a lot, and we've came down a little bit. The implications of interest rates will range from borrowing costs all the way to asset valuations, and so it's going to take time to work its way through this system. But yes, time is going to be important. A little bit of relief for 2025, but long-term will be important to watch.”

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