Farmers Should Get Some Relief On Input Costs In 2024; Other Challenges Likely To Remain

OLIVIA MCCLURE

ALEXANDRIA, LOUISIANA

After a year of economic challenges amplified by unfavorable weather, Louisiana farmers recently got some good news from LSU AgCenter experts. The costs of inputs like fertilizer and fuel, while still high, are trending downward.

But high interest rates and lingering effects of the coronavirus pandemic, which took hold nearly four years ago, are expected to continue to present hurdles. And economists are keeping an eye on international affairs – particularly crop production in South America and competition over markets – that could impact farmers’ finances.

Those topics were the focus of the Louisiana Agricultural Outlook Forum held Jan. 10. Dozens of farmers, who right now are mulling what crops to plant and how many acres of each in the coming growing season, gathered at the State Evacuation Shelter near Alexandria. 

Net farm income in the United States has dropped in recent years but remains above long-term averages, said Brian Hilbun, a research associate in the AgCenter Department of Agricultural Economics and Agribusiness.

Overall production costs are projected to decrease by about 7% this year, he said. Prices of fertilizer – which spiked after Russia’s 2022 invasion of Ukraine – as well as diesel and some farm chemicals are coming down.

“We’re thankful for that,” Hilbun said.

Gains realized by the lower input costs, however, could be eaten up by still-high interest rates on loans for land and equipment and persistent inflation. Commodity prices could stand some improvement in 2024 to help offset those expenses, he said.

An array of global factors will influence acreage decisions and how much farmers get paid for commodities this year, said AgCenter economist Michael Deliberto.

It appears that soybeans will be favored over corn on many farms, with demand for biofuels and soybean oil driving the market. Exports could increase from 2023 numbers as the U.S. competes with Brazil for foreign soybean markets, including China.

Deliberto predicts an uptick in rice acres as the U.S. faces possible competition from Brazil for the Mexican rice market and a continued decline in American cotton acres. Domestic cotton use is the lowest it has been in 100 years.

The U.S. could import less raw sugar from Mexico, where the sugarcane crop has been reduced by drought. 2024 could be a record year for sugarbeet production in the U.S. Meanwhile, sugarcane production in Louisiana, which also has struggled with drought conditions, is down from record highs reached in recent years.

For beef cattle producers, high prices have helped in a time of rising production costs. But there is now concern about demand decreasing as more shoppers opt for less-expensive meats such as pork and poultry, said AgCenter economist Kurt Guidry.

Still, “we’re looking at a pretty positive profitability outlook,” he said.

Louisiana’s forestry sector has endured a difficult past couple of years. Hurricanes, drought and wildfires wreaked havoc on timber, and high mortgage rates have led to fewer people building new houses, slowing demand for wood.

But there is reason to be optimistic, said AgCenter economist Jinggang Guo. Pine prices are strengthening. Consumption of wood pellets – a Louisiana export – is growing in Europe, where they are used for heating. New sawmills have come online in the state.

Two members of Louisiana’s congressional delegation – Rep. Julia Letlow, who represents northeastern Louisiana and portions of the Florida Parishes, and House Speaker Mike Johnson, whose district includes northwestern and central parts of the state – recorded video addresses that were shown at the event. 

They discussed efforts to draft a new farm bill, which funds several food and agriculture programs. The current farm bill, passed in 2018, has been extended through September.

The event also featured panel discussions with producers, lenders and policy experts.

Complete slide presentations from the forum are available online at http://tinyurl.com/4ez5tkde. ∆

OLIVIA MCCLURE: LSU AgCenter