Optimism seen as U.S. agriculture heads to 2022
Fox discussed his prospects at Extension of Oklahoma State University 2021 Rural Economic Outlook Conference in October, where he addressed the long-term effects of the COVID-19 pandemic, shrinking workforce, impacts of drought on livestock supply, the concentration of packers, the profitability of poultry, the political opinions he has seen emerge from Washington DC and more.
“Overall commodity prices are doing quite well, especially grains and especially cotton,” Fox said. “Cattle prices could be a little better, but they’re not terrible. The most obvious challenges are some key risks on the farm inputs side.”
Among the challenges listed by Fox:
- There are going to be shortages of chemicals and fertilizers due to plant closures and logistical issues.
- Fertilizer prices are going to be higher the rest of this year and through 2022.
- Supply chain issues will continue to plague producers for the foreseeable future.
“Repair parts for tractors, equipment blades, forage chippers, pesticides and herbicides; you name it, there are going to be delays and shortages, ”Fox said. “As a former dairy farmer, I can attest that a producer can have big problems if a piece of equipment breaks down. To combat this, keep more spare parts on hand, if possible, and stick to a well-designed maintenance schedule. ”
OSU Extension Area Farm Economics Specialist Trent Milacek agrees with Fox and recommends Oklahoma growers take whatever steps they can to ensure they have a plan in place for several months. or more to mitigate the negative effects of potential challenges.
“Buy your fertilizer supplies, even if you have to keep them in a shed,” Milacek said. “Take advantage of the current good crop prices; futures contract, look at futures prices, lock in what you can. There is not much that an individual producer can do about the details of the current trade negotiations, but producers must be careful and manage the fallout and associated effects as best they can.
The ongoing trade negotiations between the United States and China could be particularly important. The current Phase 1 agreement expires at the end of this year. Most analysts agree that US agriculture has done well overall. Unfortunately, other segments of the US economy have not.
“Producers and agribusiness leaders need to watch what happens with the upcoming negotiations as America tries to get something better on all levels,” Fox said. “There is going to be a lot of pressure from various industries on negotiators. ”
Protein production is expected to do well in 2022. The world is demanding access to more meat – beef, chicken, pork, Fox recently told the farm television program. SUNRISE.
“The United States is the most efficient meat producer in the world,” he said. “As long as we have a level playing field, there should be strong international markets for American meat, although some types are more popular than others in specific countries, as always.”
On the home front, most beef cattle will need additional feed in addition to hay this winter. The amount and type of supplement depends on the type and amount of hay available. Crop and feed prices are significantly higher this year, in part due to the export-oriented corn market. Current corn prices in the southern Great Plains are 40 to 50% higher than the same time last year.
“Hay prices in Oklahoma are up 23.5% year-over-year and 10.6% in Texas compared to the same period last year,” said Derrell Peel, hay specialist. livestock marketing at OSU Extension. “Increasing feed costs have negatively affected feedlots for several months. The impacts will increase as cow-calf and feeder producers face additional feed and supplement needs this winter. Plan for these needs now.
OSU Extension recommends that producers start the process by increasing their awareness of the nutritional needs of cattle according to the stages of production. Analysis and weighing of hay will help determine the nutritional contribution of hay to meeting livestock needs, and careful feeding of hay can help reduce waste and increase reserves.
In terms of overall earnings projections for farms and ranches, commodity prices will be high, but most industry analysts, including Fox, don’t expect producers and agro-dealers. -industrials are bearing the brunt of the cost increases this year. On the contrary, the increases will be felt the hardest on income generated by crops and livestock next year.