The U.S. farm economy in 2022

    Manulife Investment Management
    David A. Fortin, Senior Director, Economic Research, Timberland and Agriculture
    Jaspreet Aulakh, Senior Natural Resource Economist, Timberland and Agriculture

    Despite rising uncertainties and continued volatility in the global economy and agricultural sector, the U.S. farm economy is well positioned in 2022/2023 according to the latest outlook from the USDA.

    There is an elevated—and rising—level of uncertainty surrounding the global economy and the agricultural sector that is anticipated to continue into 2023. However, while the risks of a global economic slowdown pulling demand and prices for farm products lower are real and rising, this doesn’t change the solid medium-to-longer term underlying market fundamentals that we believe underpin this sector.

    Continued population growth and rising incomes in emerging economies should bolster agricultural crop demand for use as food and feed, supporting row crops, while the longer-term trend of rising incomes enables the adoption of healthier eating habits that include a larger share of permanent crops, including plant-based proteins. Meanwhile, on the supply side, current elevated prices for row crops are supportive of supply growth despite high input costs and ongoing shipping challenges. The agricultural sector has historically proven to be resilient under challenging economic conditions, including rising inflation and interest rates, and the specific market characteristics that enable this resilience are expected to remain and should provide support in the current economic environment. Additionally, current high prices should support continued supply growth.

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