Lance Albin, president of agribusiness at UMB, recently spoke with Jaren Flinn, host of Bulk Loads‡ podcast, about his financial outlook for agriculture in 2023.
Agriculture outlook
Here are five key takeaways for the agriculture industry this year:
Pricing
Today, commodity prices are strong, especially compared to five years ago. Grain, cattle and the commodity basket as a whole have moved up significantly and we’re a much stronger ag environment than we’ve seen in recent years.
Land
Land prices, which are typically the largest asset for family farms, are increasing, which allows for more equity on the balance sheets. We anticipate this to continue throughout 2023.
Interest rates
As we combat this round of inflation and deal with increased interest rates, working capital becomes extremely important. If you are looking to expand your business, it’s crucial you do a thorough analysis and factor in the cost of capital before making the decision. But, if you can do it and it makes sense financially, you should still consider growing your business.
Inflation
The Consumer Price Index (CPI) is starting to moderate, which generally is indicative that inflation will soon temper. Additionally, the last gross domestic product (GDP) rating was strong, which could point to a solid environment where inflation can come down without crippling the growth of the economy. This, of course, would be ideal for everybody.
Optimism
Overall, there is reason for optimism in the ag industry this year, despite the current economic environment and increase in interest rates.
Listen to the full interview on the Bulk Loads podcast website here‡.
Our Agribusiness Division serves all areas of agriculture, including producers, processors, suppliers and manufacturers of equipment and goods, throughout a 12-state area. Learn more about what ag means to UMB and see some of our clients in action.
When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.
