FED Economist Nathan Kauffman Sees Down Trend in Both Food and Ag CommoditiesWed, 01 Mar 2017 06:29:33 CST
As the lead expert in agricultural economics for the Federal Reserve Bank of Kansas City, Assistant Vice President and Omaha Branch Executive Nathan Kauffman, oversees several Bank and Federal Reserve System efforts to track agricultural and rural economies. He shared his perspective on the rural economic situation with attendees of the AgVocacy Forum hosted by Bayer ahead of the 2017 Commodity Classic in San Antonio. Radio Oklahoma Ag Network Associate Farm Director Carson Horn was there covering the event.
According to Bureau of Labor statistics, the price of food, starting in September 2016, has declined year-over-year each month up to now. Kauffman says you would have to go as far back as the start of the recession in 2009, to find food prices at a similar decline, and beyond that you would have to go back to 1959-60.
“There’s obviously a lot of details built into that,” Kauffman said. “I think a lot of what we’re seeing and what we’re talking about today really relates to some of those trends.”
Specifically, Kauffman points out that purchases on food for the home, has declined for 14 months consecutively. Conversely, purchases of food away from the home (i.e. restaurants), has increased. In connecting the dots with points previously made, Kauffman explains that the data he has collected is making strong market signals.
“What we’ve been observing in the US farm economy, and this is not unique to the United States,” he said, “is actually that farm income has been declining for four consecutive years and all market signals right now, including food prices, would suggest that farmers need to cut back on acreage.”
In summation, Kauffman says there are different scenarios unfolding on both the short and long term. On the short term, he says farmers are reacting to tighter profit margins. In the long term though, Kauffman says we can recognize there will always be a demand in the marketplace for both cost-efficient food, but also recognize that there is a growing segment of the market with other preferences.
“This is where I think there are other opportunities,” Kauffman concluded. “We need to be talking to producers about how to be thinking about dealing with short term pressures, but position them for the long term.”
Click on the LISTEN BAR to hear Kaufman's comments from the Ag Advocacy Conference sponsored by Bayer Tuesday in San Antonio.
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