Slower economic growth likely will impact agricultural producers sometime in 2020 but producers can still look forward to a good year, several speakers said at a University of Idaho outlook forum Dec. 12 in Caldwell.
Strong employment and wages should continue to support consumer spending, but the rate of Gross Domestic Product growth is expected to decline as other countries buy fewer U.S. goods amid their own slowdowns.
On the plus side, Idaho farmers and ranchers are expected to benefit from some recently higher commodity prices and flat input costs.
Because of the outlook, now is an ideal time for producers to get their financial houses in order and fine-tune marketing strategies, said Ben Eborn, an agricultural economist for UI Extension.
Ashlee Westerhold, UI Extension area economist based in Twin Falls, said she expects 2020 increases in wages and feed costs and operating capital interest rates as producers borrow more and hold crops longer.
Hard-to-predict fuel costs could increase on trade issues and fuel supply. Costs should remain unchanged for power, custom farming services, fertilizers and chemicals.
The GDP growth rate for this year probably will be slightly below that of 2018, said Riley Griffin, credit vice president with Northwest Farm Credit Services in south-central Idaho. Business investment in fixed assets has softened, mainly on trade concerns.
“There are enough good things going on in the economy that we will make it through 2020 without a recession,” he said. Consumer confidence and job growth remain solid and inflation is low.
Challenges for agriculture include trade uncertainty with China, whose economy has been slowing, and a dollar that appreciated in 2018 and made U.S. goods less competitive internationally, Griffin said.
“I’m more optimistic about the state of Idaho,” he said. The state’s large dairy industry improved in the past year, and some sugar beet and potato prices are stronger.
More than half of Idaho’s ag exports go to Mexico and Canada, UI ag economist Garth Taylor said. Agriculture will remain a major contributor to the Idaho economy because of its big livestock segment that provides products domestically and internationally, its growing food-processing sector and research- and technology-driven increases in farm output and worker productivity.
Land prices likely will rise again in 2020 on high demand and low interest rates, “but other than that, we’ve got some very strong years ahead of us in agriculture,” he said. Idaho’s diverse product mix is a big factor.
A glut of wheat remains in global and U.S. markets, and prices have been tracking around 10% below year-earlier levels.
“There is a little less wheat out there, but we need a lot less to make some changes” in the market, said Jon Hogge, a UI Extension educator in Rexburg.
The outlook for potatoes is mixed. North American Potato Market News President Bruce Huffaker said that in the U.S. he expects increased movement of chipping potatoes and declines in table potato shipments, frozen processing usage and dehydration.
Potato production is down in the U.S., on factors including extremely wet conditions in the Midwest, Idaho’s first crop-damaging freeze since 1985 and the slowest-ever start to the Columbia Basin planting season, he said. Data do not reflect potential storage challenges.
European output rose from 2018, though potato yields are expected to be below average and external exports short of the recent trend, Huffaker said.
Canada’s production is up slightly, but raw-product supply will be insufficient for new processing capacity. Storability will be an issue in prairie provinces, where the crop is down despite acreage increases.
Competition should be stiff between industry sectors for raw product, he said.