The agricultural sector in the US is on the brink of a recession. At least that is what three quarters of the more than seventy agricultural economists on the panel of the American newspaper Farm Journal expect. Lower prices for agricultural products are certainly not good for earning power.
On average, U.S. farms are not in dire straits, but their financial health is deteriorating, according to Farm Journal. Margins are particularly under pressure in crop farming. Grain prices have fallen faster than input prices. If this situation continues, the consequences will be greater. 2021 and especially 2022 were financially good years for the average American crop farmer. So there was some fat on the bones to bridge the lean years. Over the past two years, those fat reserves have been used up considerably. Livestock farming, specifically dairy and beef cattle, is doing much better than crop farming and pig farming, according to Farm Journal.
Income next to the farm
Farms with large leaseholds and/or heavy debt loads are most vulnerable to the economic downturn. Across the sector, there are no signs of a recession. "A larger share of farmers have off-farm income to help smooth out cyclical fluctuations. Most farms have healthy balance sheets (thanks to rising land prices) and there are positive earnings and subsectors that diversified farmers can benefit from," Farm Journal reports. Full-time row crop operations (corn and soybeans) of 1.000 to 2.000 acres (about 400 to 800 hectares) with a large portion of unoccupied leased land are in the hardest hit corner.