IARN — The biggest story across the globe has been Russia’s invasion of Ukraine over the last week. The issue has had a heavy influence on the agricultural markets here in the U.S. As questions linger about the conflict’s impact on agriculture, an economist sees a positive outlook for the farm economy this year and beyond.
Nathan Kauffman is the vice president of the Federal Reserve Bank of Kansas City. He talks about some of the positive indicators that point to a possibly strong farm economy for 2022 and longer term.
“Some signs there may be optimism include economic activity over the past two years has been tied in various ways to the pandemic. We’ve seen that economic activity rebound sharply, and there does appear to be some momentum. One of the strongest increases that we’ve seen in many years for example in GDP in 2021 following what we knew to be a decline in 2020. It also does appear that households are well positioned. For the most part, labor markets are very strong. We’re seeing wages rise at a pace that we haven’t seen in quite some time. And consumer spending well exceeds the level that we had been prior to the pandemic.”
Kauffman also discusses potential risk that could impact the ag economy in the coming years.
“Inflationary pressures have generally persisted for about the past year or so. In agriculture specifically, we all know of the antidotes pointing to things like increased fertilizer prices and other things even tied to land and starting to see pressure on cash rents. We know those inflationary pressures are somewhat complex and tied to issues related to labor shortages.”
Kauffman adds another risk to the farm economy is the potential for changes in interest rates.
Story courtesy of the Iowa Agribusiness Radio Network.
Image source: Wikimedia Commons
