The U.S. Agricultural Market Outlook is prepared annually by economists with the Food and Agricultural Policy Research Institute (FAPRI) and MU Agricultural Markets and Policy (AMAP) and is updated each August. FAPRI Director Pat Westhoff said the report gives policymakers, farmers, agribusinesses and the public an overview of the state of the U.S. farm economy. The market projections it contains can be useful to farmers making production choices, to policymakers trying to decide how to respond to agriculture issues, to lenders who must decide whether to make loans and to agribusinesses making investment decisions.
FAPRI released its most recent U.S. Agricultural Market Outlook in March – and has already released an additional report, which presents a preliminary analysis of the impact of the COVID-19 pandemic on agricultural markets in the U.S.
“The point of this additional report was to try to come up with some very, very preliminary estimates of what COVID-19 might mean for agricultural markets and farm income,” Westhoff said. “We looked at what the COVID-19 crisis might mean for the macroeconomy and made several assumptions related to how it might affect consumer habits for the rest of the year.
“There is massive uncertainty surrounding the entire issue currently. Information is changing by the minute. It’s important to remember that these are just models, and we’re making assumptions with the data that we have.”
Purchasing patterns have changed drastically across the globe, as “nonessential” businesses closed and individuals sheltered at home globally. Westhoff said as movement and commerce slowed, the economy is expected to follow with projections of a significant contraction in U.S. gross domestic product (GDP). The depth and duration of the economic downturn remains quite uncertain.
Commodity prices are taking a hit during the pandemic, with crop and livestock prices seeing decreases across the board.
“It’s tough to come up with something recently that has affected the markets in this way,” Westhoff said. “The 2008 financial crisis caused a lot of changes, and we saw a very sharp decline in commodity prices. This is happening much faster. We’re seeing huge changes in a short period of time. There is also a ton of uncertainty. We don’t know what things will look like in a week.”
FAPRI is continually monitoring the daily updates. The institute generally releases an update to its outlook in August – but may change its approach this year.
“We’re trying to decide what our next step should be,” Westhoff said. “We’ll definitely have an update – it just depends on if we wait until August to release it. Right now, we’re just diving into the data that we have.”
FAPRI is one of the University of Missouri College of Agriculture, Food and Natural Resources’ Programs of Distinction, a select collection of programs that exemplify CAFNR’s drive to distinction. Those programs define CAFNR’s current impact on Missouri’s agriculture and natural resource economies, providing understanding for how CAFNR is addressing challenges facing Missouri agriculture and natural resources.