TEPAP - Day 3 morning session

Published on: 07:42AM Jan 12, 2011

For the Tuesday morning session of the TEPAP conference, we had Dr. Ed Siefried, a noted economist to explain how the macro economic trends will affect farming in 2011. Highlights are as follows:


1. The economy in 2011 is expected to be recovering with growth possibly around 4% with low inflation. However, in all previous recessions, in order to have a healthy recovery, housing must participate. Right now, housing starts are running about 1 million behind normal trend line on an annualized basis. Until this gets closer to trend line, we will most likely not have a great recovery.


2. Manufacturing has been healthy and expanding for over a year now. Some of this relates to build up of inventories that were depleted during the recession, but it is still expanding, which is good.


3. The old normal for baseline unemployment was near 4%. This number is now expected to be closer to 6%. If this ends up being incorrect, then inflation may become more of a factor. However, while unemployment remains near 10%, it is difficult for inflation to be much of a factor.


4. Discussion was held among 75 farmers regarding whether we have a farm land bubble right now. The consensus seemed to be that as long as farm income remains high and interest rates remain low, we are not in a bubble. However, if one of these factors turns negative, then we will see some correction in prices. If both turn negative, the correction will be much greater.