The recent history of agriculture has been one of extremes: historically low rainfall and production, record high commodity prices and farmland values.
But predicting how long such trends will continue is as tricky as the state’s weather.
“There’s a lot of uncertainty,” said Ted Schroeder, a professor of agricultural economics at Kansas State University. “You listen to us and we talk both sides of things. That’s just because it depends on what happens – where mother nature takes us, where policy makers take us.”
In the short term, Schroeder and other analysts don’t anticipate dramatic changes.
Arlan Suderman, a Wichita-based analyst with Water Street Solutions, said he is paying attention to long-term weather forecasts that factor in data such as the sea-surface temperatures of the Atlantic and Pacific oceans.
“Right now they lean toward a hot, dry summer,” Suderman said. “But we’ll be watching forecasters closely in the next few months.”
If rain is again in short supply, commodity prices are likely to resemble the record highs reached last year.
That would not be good for anyone, including farmers, Suderman said.
“What you always worry about is prices getting so high that they kill demand and it takes years to get it back.”
On the other hand, higher grain production – and resulting lower prices for grain – wouldn’t immediately reduce the price of meat to the consumer, Suderman and Schroeder both noted.
“We have reduced our herd sizes,” Schroeder said. “You don’t simply turn that around overnight. We are going to see high retail prices for beef and pork, and of course poultry will be pulled up with those, for at least the next six to eight months. It could be a year.”
Other factors will influence commodity prices well, chiefly the weather, production of crops in other parts of the world, and the demand for foodstuffs in emerging economies.
The analysts say farmland prices have been driven up by several factors, including cash-rich farmers, high food prices, low interest rates and a lack of other attractive investments.
“Prices are very elevated now,” Suderman said. “There’s a concern we may be in a land bubble. I would assert it’s more of a land balloon. It wouldn’t be surprising if we saw a 15 to 17 percent correction lower, but no absolute collapse.”
Schroeder called the land price question “a really tough one.”
“The first question is: Is money going to remain cheap? Another is these crop prices. If we maintain crop prices, we could see even higher land prices. If we go back down ... there will be some downward pressure. I don’t think land prices are going to collapse in any event.”