This site has limited support for your browser. We recommend switching to Edge, Chrome, Safari, or Firefox.

The US crisis hit agriculture hard

Кризата в САЩ удари тежко земеделието
The Federal Reserve's fight against inflation and a rising U.S. dollar have taken a toll on agriculture, manufacturing and the food industry, according to CoBank's latest report.

High manufacturing costs and a strong dollar are making U.S. exports more expensive, hurting the nation's trade options, economists said in a quarterly report.

After 20 months of hikes, interest rates hit highs not seen since 2007, sparking debate over whether the inflation-deflation mechanism will eventually lead to a recession, experts say.

At the same time, the struggle of farmers in the country this year included additional challenges. Recent disruptive geopolitical and economic events, such as the pandemic, the Russia-Ukraine war and inflationary pressures, have led to an unusual situation in which commodity prices and the U.S. dollar have risen simultaneously, according to CoBank.

"The challenge facing agriculture and other industries that rely heavily on global markets is that their export partners simply cannot afford to buy American products," CoBank director Rob Fox said in a statement.

According to him, when the loss of exports and the general slowdown of the economy are combined, it causes the danger of bankruptcies for many companies in the sector.

American grain and oil products also face climate anomalies, as low Mississippi River levels prevent barges from transporting grain. That, combined with strong export competition from Brazil and Russia, is slowing corn and wheat exports, according to the report.

China's lack of interest in soybeans is also affecting exports, but at least domestic interest is picking up as the market meets growing demand for biodiesel.

Looking ahead, Federal Reserve Vice Chairman Philip Jefferson told a recent business meeting in Dallas that the U.S. economy and labor market may be insufficient to achieve further reductions in inflation as oil prices continue to rise. . He added that he is watching with interest for a potential slowdown in external economic growth, as China and Europe are already feeling the slowdown in manufacturing.

Leave a comment

Please note, comments must be approved before they are published