LAKELAND, FL – Despite rising interest rates and input costs, the 2022 farm economy is experiencing positive growth due to strong net farm income, liquidity, and higher cash rents, according to AgAmerica economist Dr. John Penson, who also warns that higher cash rents are tightening margins for tenant farmers.
Even with rising interest rates and higher input costs, the 2022 farm economy is relatively strong compared to the challenges experienced during the 1980s financial crisis.
While there is a resemblance to the 1980s in terms of rising interest rates and inflation, current interest rates are not expected to come close to the double-digit interest rates that occurred during that decade.
When considering farm income, liquidity, and cash rents, Penson says it will be important for farmers, ranchers, and rural landowners to be cautious and strategic when planning expansion and land acquisition projects.
USDA projects a net farm income of $113.7 billion in 2022, a decrease of 4.5 percent from 2021 but still 24 percent above the ten-year average.
Penson says working capital is also strong for liquidity, equipping farmers with greater purchasing power.
Another indicator of economic health, cash rents have increased ten percent or more in some areas, and while this is beneficial to landowners, it’s another higher input cost for farmers.
(SOURCE: All Ag News)