Purdue Economist Dr. Chris Hurt brought out a large crowd to the Hoosier Ag Today Seminars at the Indiana/Illinois Farm Show on Wednesday. Dr. Hurt painted a picture of a farm economy that is suffering from too much supply and dwindling demand. As a result, his price outlook was not what farmers really wanted to hear, “I am predicting $4 corn and $9 soybeans for the next several years.” His profit prediction for the livestock sector was not much better for 2016 and 2017.
Thus, he stressed that producers need to find ways to reduce their cost of production, “We may get a little help from lower input costs in 2016 in the form of lower prices for fertilizer and fuel. I hope we will see lower crop insurance premiums, and cash rents on average should be lower for the 2016 crop.”
He said, in many cases, these reductions will take several growing seasons to achieve and will not be easy to make. He sees slimmer profit margins in 2016, 2017, and 2018.
Hurt added that there may be short term rallies that give us higher prices for a short time, but over the next few years the farm economy will look a lot like 2004, “Producers are going to have to recognize that we have turned to a new era that is not the boom era but one of moderation, and we need to start making adjustments.” Some of those adjustments will be in our operations and some may have to be in lifestyle and family living costs.