, Top Producer Business & Crops Online Editor
What factors are affecting your farm's bottom line in the current economy? Look beyond the farm gate, says Ron Plain, University of Missouri agricultural economics professor.
"This year, the big driving forces in the ag sector are not on the farm,” Plain says. He credits oil prices, biofuels and the economy for all pressuring agriculture.
Plain sees a clear relationship between corn and energy prices. "We have tied grain prices in the U.S. to energy prices, thanks to our biofuels policy,” he says.
Livestock Sector Also Pinched
Increases in energy prices have created an economic slowdown, Plain says.
The poor economy is also affecting the livestock sector. "Recessions don't help out on beef demand,” he says.
Plain says beef demand is shrinking because consumers are tight on cash. "When the economy is good, you'll find a big spread between the cheap and high cuts of beef,” he says. But right now, the spread is small.
"We're still eating beef, but we're eating the cheap stuff,” he says.