Coping with a difficult agricultural economy

Coping with a difficult agricultural economy

Tim Hammerich

News reporter

This is Tim Hammerich from the Ag Information Network with your report “Farm of the Future.”

Inflation and high interest rates have been the story of the agricultural economy in 2023, leading many people in the agricultural industry to wonder what the rest of 2024 will look like. David Widmar, managing partner at Agricultural Economic Insights, says he doesn't think it's realistic to expect low interest rates anytime soon, but we've seen cycles like this before.

Widmar… “I don't think anyone out there is predicting that we will return to that extremely low interest rate environment that we enjoyed between 2010 and 2022. You know, humans can be funny when it comes to how we anchor things. And I.” I believe that many of us have only anchored this low interest rate inflation in the last two years. But if you look back a little bit, you realize that there has actually been a very low, very stable interest rate environment since about 2010. And so we've been in this bathwater for quite a while and it feels quite pleasant. How are we supposed to get out of this with the transition? And I'm not talking about situations at the 1980s level, which are farm-level interest rates of 18 percent or higher, about five, six, 7%. We were there in the late 90s and early 2000s. We may have forgotten how we managed our businesses, used debt, and managed our balance sheet assets. So let's look at that again and think about that.”

Find out more about economic trends and the short-term outlook on aei.ag.