Farm Economy Stronger Than Expected After 2020 Challenges
Agriculture took a hit from the COVID-19 pandemic, which threatened a newly-signed Phase One trade deal with China and idled many ethanol plants.
“In the spring it was pretty dire for many of the operations in our district,” says David Oppedahl, senior business economist at the Federal Reserve Bank of Chicago, which covers all of Iowa and parts of Illinois, Wisconsin, Indiana and Michigan. “But now things have improved dramatically, I would say.”
Drought conditions across parts of Iowa and the August derecho tossed a few more challenges at farm fields during the summer, but Oppedahl says after that, the weather cooperated, global markets re-opened with increased demand for diary and pork in particular, and grain prices inched up.
“It’s still a challenging time for farmers especially given everything that has happened this year,” he says, “but it’s not as challenging as we expected.”
Federal trade and pandemic relief payments have helped. A recent survey of bankers shows, for the most part, farmers are making loan payments on time and are borrowing less than expected. Oppedahl says that’s true even though funds are available and interest rates are low.
He says recovery for dairy, beef and pork producers is lagging slightly behind corn and soybeans.
The Chicago Fed will host a virtual conference on Midwest agriculture and shifting consumer preferences on Tuesday. Oppedahl says among the topics speakers will discuss is how changing demands from consumers influence food companies and the requests they make of the farmers in their supply chains.