Regional farmers are gearing up to begin spring planting. As if the uncertainty of shifting weather patterns wasn’t enough to complicate farming operations, the cost of farming has increased exponentially over the past five years. Labor, equipment, parts, and capital have surged since 2017 while the cost of land hasn’t got any cheaper, either.
Land value has increased by 15% to 25% annually since 2018. Those are big cost increases for area farmers that are battling a plethora of forces outside their control. Rising land costs have attracted some big names to the region that are investing in farmland. Joe Burrow of the Cincinnati Bengals just bought 100 acres of farmland in Iowa.
With estimates showing 60% of regional farmers having rental arrangements on the land they farm, what will all this mean for agriculture if trends continue?
Ironically, agronomists don’t believe these rising costs will impact food prices for consumers. Instead, the burden will be felt by regional farmers. The dream of buying farmland for young farmers has become more challenging, even with the restrictions for foreign investors Minnesota imposes.
Now to the weather. As we’ve discussed in the past, La Nina has impacted global weather patterns for the past three years. Now evidence suggests El Nino will likely return later this year.
For comparison purposes, the last major El Nino event in 2016 trigger the warmest year in modern history on record. The effects of El Nino often peak in December then slowly spread across the globe. We are currently in what scientists call the “spring barrier” as it pertains to El Nino prediction. It’s a period of time when the uncertainty of a strong El Nino event is tough to forecast.
Historically, strong El Nino events allow warm Pacific winds to blow in across North America keeping temperatures much milder than usual, and normally keeping precipitation below average in our region.
In the short term, it looks like at to below normal temperatures will be common across the region, with at to slightly above average precipitation.
