Steven Johnson Details Ag Economic Outlook For Paulsen Staff

July 14, 2015

As part of the Continuing Education Program at Paulsen, Steven Johnson, Farm and Ag Business Management Specialist with the Iowa State Extension Service, gave a fascinating presentation detailing the current state of the agricultural economy.

During his talk to Paulsen’s staff, Johnson explained the many factors that influence today’s ag economy, including acres planted, yield projections, carry-over inventories, export demand and weather conditions affecting day-to-day market prices. Johnson also demonstrated how periodic USDA Crop Reports have a significant impact on market prices, especially during the growing season.

Perhaps the most revealing statistic was the large drop in U.S. Net Farm Income over the past three years.

“Net farm income has gone from $129 billion in 2013 to a projected $73.6 billion for 2015. That’s a decrease of $55.4 billion or 43 percent in just three years. Imagine how a 40 percent drop in your income would affect your family?” Johnson asked the Paulsen group.

He went on to say that there are bright spots in the ag economy as well.

“Farmer equity or net worth is at a near record level, and the debt-to-equity ratio remains historically low. Additionally, we’re experiencing lower energy prices, strong demand for feed and ethanol production and strong profitability within the livestock industry, so there is good news out there as well,” Johnson stressed.

What advice does Johnson have for producers to best weather the current ag economy?

“My advice to producers is this: reduce input expenses, re-amortize loans and consider selling non-earning assets. Try to renegotiate 2016 cash land rents, seek early pay cash discounts and improve your farm operation record keeping,” he said.

“But perhaps most importantly, build strong relationships with input suppliers, landlords and your lender. Good communication helps us through these times.”

Two video segments with Steven Johnson provide interesting insight into the current ag economic situation. In Segment 1, Johnson discusses the producer’s need to realize an obvious ROI on his purchase of farm inputs.

In Segment 2, he explains that the supply of ag commodities continues to grow while no new demand is being created. This factor will continue to put pressure on ag markets.

As a leader in ag communications, Paulsen sponsors continuing education programs to stay abreast of current issues in agriculture. Special thanks to Steven D. Johnson with the Iowa State Extension Service for his valuable insights shared with the Paulsen staff.

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