The state of the agricultural economy has been low in the past few years. Heavy increases in production are leaving us with a surplus. That has been helping to drive the markets lower. Having multiple trade wars was like adding a bag of cement to those sinking prices. We have seen some turnarounds, but the road to recovery is long. We didn’t get to this point overnight, so it is reasonable to assume we won’t recover overnight either.
The signing of complete and partial trade deals is cause for some well-deserved optimism in the agriculture industry. However, one economist is looking further down the road than just into the near future. Nathan Kauffman is an economist for the Federal Reserve. He says he is looking past the immediate 12 months in our front.
Kauffman says if you look at the next five years. We need to see measurable improvements by 2025 or we will be facing a major correction. The area Kauffman is particularly paying attention to is in mid-sized operations.
Kauffman feels consolidation may be a term we will have to be getting used to in the agriculture arena if we don’t see a positive rebound in the next five years.