In an article published by AgWeb on April 15, 2019, Jackson Takach presents his outlook on the prospects of farm profitability for the 2019 growing season.
According to Takach, while the USDA is predicting farm profits to increase by 10% in 2019 and net cash profits will increase by approximately 4.7%, farm debt-to-asset ratios have also been on the rise. Additionally, farm profitability will largely depend on the region in which a farm operates and what kind of crops are raised. The USDA is also predicting higher commodity prices in 2019 will also have a positive impact towards the overall increase in farm profits.
Even so, Takach describes 2019 as one that will be a 'grinder' and that profit increases will largely need to come from reduced expenses, not increased revenues. While some operators will see a net revenue increase, many will see revenues continue to be below break-even, necessitating a reduction in expenses for the 2019 crop season.
While Takach's report expresses cautious optimism for the future, the report also does not take into consideration the recent outbreak of swine flu, which is wreaking havoc on Chinese and African swine herds, increasing demand for U.S. pork and beef. Also not acknowledged are the recent positive developments within the U.S. and China trade negotiations, which are nearing finality with increased commitments for U.S. agricultural products.
However, as with all successful businesses, it is imperative that U.S. farmers continue to negotiate for better pricing of crop inputs, to increase profitability through increased efficiency and reduced input costs.
Read the AgWeb article through the following link: