May 4, 2022
Contact: Pate McCuien, 573-882-4870, McCuienp@missouri.edu
This March, the MU Food and Agricultural Policy Research Institute (FAPRI) released their baseline outlook, a yearly report that provides the economic outlook of the food and agriculture industry. The report has now been updated to include the effects of current events, such the war between Russia and Ukraine, on the markets’ trends and projections. The updated report suggests there will be higher costs, higher consumer food prices, and higher farm receipts, or the value of crops and livestocks to farmers.
The initial outlook released in March was based on information available in January 2022. The partial update to the baseline is based on information available in mid-April 2022.
“The increases in U.S. crop and crop product exports because of the Ukraine war and reduced South American supply are based on tentative judgments, not detailed assessment,” said Pat Westhoff, director of FAPRI. “As this is a partial update relative to the full FAPRI baseline, we focus on only the next two years.”
The below findings are included in the report:
- Projected prices for crops harvested in 2022 are much higher than the FAPRI baseline outlook. Corn prices exceed $6 per bushel, wheat is over $8 per bushel, and soybeans top $14 per bushel. Even these prices are below prices implied by futures markets in late April ‘22.
- Livestock sector prices are boosted by lower ’22 production than previously expected and strong demand. Avian influenza reduces the number of laying hens and egg production.
- Production expenses are also higher than previously projected. Higher costs for fertilizer and feed contribute to a $55 billion (14 percent) increase in farm production costs this year.
- Projected net farm income in 2022 is almost the same as in ‘21. Growth in crop and livestock sector receipts offsets the increase in expenses and a drop in government payments.
- Consumer food prices increased by 6.8 percent in 2022, well above previous estimates than even the 5.5 percent rate in 2008.
Though the FAPRI has provided their outlook on what could come, Westhoff said that the insights could change based on the way recent current events play out.
“The outlook for 2023 and beyond, based on the updated report, depends on the evolution of the war in Ukraine, the weather and a host of other factors,” Westhoff said.
Assuming a partial return to normal next year, FAPRI-MU projects lower prices for many commodities, lower net farm income, and slower food price inflation for 2023.
