The U.S. economy has persevered through various setbacks over the past few years, and more challenges are expected throughout 2024. However, with the challenges also come new opportunities.
CoBank’s Knowledge Exchange recently released their year-ahead outlook report, detailing key predictions for the upcoming year. Tom Halverson, CoBank president and CEO, wrote in the report that he remains optimistic for the upcoming year, given the strong economic fundamentals of the economy in the past few years.
However, he noted, “My biggest concerns are in the area of federal policy, where the risk of self-inflicted damage will be meaningful in the coming election year.” He also stressed the importance of passing a new farm bill along with stabilizing fiscal and debt dynamics.
Congress dysfunction
Congress is currently racing the clock against the deadlines to pass appropriation bills for federal departments and agencies. If four appropriations bills are not funded before Jan. 19, several government departments will shut down, including the Department of Agriculture. Funding for the eight remaining bills expires just two weeks later on Feb. 2. Until Congress passes the funding bills, little work can proceed on major bills, including the farm bill.
The continuing resolution passed last November allows for some benefits, such as extending the current farm bill through the end of September. Congress has an additional 10 months to complete the newest farm bill, but the new deadline comes during the busy political season for presidential primaries and congressional elections.
“By the end of March, over 30 states will have conducted primaries or caucuses. And while farm policy will be a factor in some of those states, none of the presidential campaigns is strongly focused on ag issues,” wrote Brian Cavey, CoBank senior vice president of government affairs.
Cavey noted that most House and Senate members this year have never voted on a farm bill, which makes for a lot of people to educate about the legislation’s importance. In addition, current Secretary of Agriculture Tom Vilsack—the longest-serving ag secretary in history—is expected to retire, so regardless of who wins the presidential election, we will likely have a new USDA secretary, adding a new face and new uncertainty.
“Fortunately, we have time and it is possible that Congress can muster the political will to get this job done,” Cavey said. “But it would be a mistake to assume that reauthorization in 2024 is a done deal.”
Beef sector
The livestock sector should see modest improvement in profitability in 2024 due to lower feed costs and steady domestic demand, wrote Rob Fox, director of CoBank’s Knowledge Exchange research division. However, input costs are likely to continue their upward trend. Corn and soybean prices are now easing, but other costs are expected to rise.
Animal protein demand has outweighed supply for the past several years, wrote Brian Earnest, lead economist for animal protein in CoBank’s Knowledge Exchange research division. Consumers are expected to reevaluate their budgets this year as a result of inflation, but meat demand has so far seen minimal deterioration, he said.
However, he noted, “Beef prices are likely to remain elevated, but consumers are close to their breaking point.”
Shrinking production numbers will pressure all beef supply chain levels, and weaker demand for pork and poultry could suggest potential for price deflation. Shrinking cattle numbers will continue to add challenges for packers. Higher cattle values are pressuring feeder and packer margins lower in the first few months of the year, a dynamic that hasn’t been seen for quite some time, Earnest said.
U.S. meat and poultry exports remain resilient, and CoBank expects U.S. animal protein to stay competitive with top producers in the global market, but open access to foreign markets will remain critical.
“While there are some obvious (and not-so-obvious) hurdles in the future for animal protein producers, demand has remained resilient, fueling progress and optimism in the path ahead,” Earnest concluded. — Anna Miller, WLJ managing editor
