ECONOMIC OUTLOOK FOR FARM SURVIVAL IN THE CURRENT FARM ECONOMY DOWNTURN

James W. Richardson2, Joe L. Outlaw1

1Regents Fellow and Co-Director of Agricultural and Food Policy Center, Texas A&M University

2Senior Regents Professor and Co-Director of Agricultural and Food Policy Center, Texas A&M University

 

ABSTRACT

Agricultural producers in the U.S. are currently struggling financially.  Farms and ranches are losing money and some are going out of business. The farm economy downturn is not confined to the United States, based on the recent decreases in farmland values around the World. Many farmers and politicians are asking if the current downturn is going to be like the farm crisis of the 1980s. This paper reviews why the current conditions are not the same as the 1980s and projects the likely economic situation for representative commercial farms in the United States given sustained low prices.

Underlying economic conditions in the general economy do not suggest that a repeat of the Farm Crisis of the 1980s.  However, just because economic conditions are not as bad as the 1980s does not mean things are not bad.  Results from simulating 63 U.S. representative crop farms indicates that 30 will face high probabilities of liquidity and equity issues through 2025, to the extent that their overall ranking for economic viability will decrease one or two levels.  Thirty-three of the 63 crop farms will be able to weather the crisis.


BIOGRAPHY

Formerly Co-Director of the Agricultural and Food Policy Center, Texas A&M AgriLife Senior Faculty Fellow, and Senior Regents Professor in the Department of Agricultural Economics at Texas A&M University.

James received his Ph.D. in agricultural economics at Oklahoma State University in 1978 and joined the Texas A&M Department of Agricultural Economics in 1978 where he taught risk analysis and conducted research on farm policy, risk analysis, and the economic feasibility of alternative feedstocks for renewable fuels.  He is best known for his farm level policy analysis research and simulation models. Using his models, the Agricultural and Food Policy Center prepares an annual report for Congress projecting the economic viability of 95+ representative crop, cattle and dairy farms in principal production regions of the United States.  Using the representative farms, the Center has assisted Congress by analyzing the probable economic consequences of alternative farm bill proposals for every farm bill since 1985.

Recent publications by the Center are available at: https://www.afpc.tamu.edu

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