Purdue Agricultural Economics Report

The Purdue Agricultural Economics Report (PAER) exists to serve and further the core mission of the department to engage with real world problems that are of value to stakeholders. The scholarship communicated in this publication will represent the department’s excellence in creative endeavor for new knowledge and its dissemination in the economics of agriculture and natural resources.

Recent Publication:

Purdue Ag Econ Report: Ag Outlook 2023

January 10, 2023

Purdue Ag Econ faculty take stock and give their perspective on key issues facing the agricultural economy in 2023.

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Articles:

What is the “language” of the farm bill?
Publication Date: January 2023
Article ID: PAER-2023-10

Roman Keeney, Associate Professor of Agricultural Economics

Summary: The 2023 Farm Bill process is sure to produce significant debate, analysis, and opinion. This primer covers some basic “language skills” for tracking farm bill discourse in 2023.
How does the farm bill get made?
Publication Date: January 2023
Article ID: PAER-2023-09

Roman Keeney, Associate Professor of Agricultural Economics

Summary: With current farm legislation expiring in September, we take this opportunity to review the process of writing a new Farm Bill for 2023 against the current timeline and political landscape.
The Outlook for the U.S. Economy in 2023: The Faster Inflation Falls, the Milder the Recession Will Be
Publication Date: January 2023
Article ID: PAER-2023-01

Larry DeBoer, Professor Emeritus of Agricultural Economics

Summary: Professor DeBoer surmises that a recession is likely in 2023, but it may have enough confounding factors (e.g. low unemployment) to make it quite mild.
Trade and Trade Policy Outlook 2023
Publication Date: January 2023
Article ID: PAER-2023-02

Russell Hillberry, Professor of Agricultural Economics

Summary: A look at the factors that could impact trade and trade policy in 2023.
What factors will shape a 2023 Farm Bill
Publication Date: January 2023
Article ID: PAER-2023-03

Roman Keeney, Associate Professor

Summary: At the end of September 2023, the most recent omnibus “Farm Bill” (passed in 2018) will expire. This deadline for reauthorization is one of a number of factors that promise an interesting 2023 for farm policy watchers.
Food Price Outlook for 2023
Publication Date: January 2023
Article ID: PAER-2023-04

Jayson L. Lusk, Distinguished Professor and Department Head of Agricultural Economics

Summary: The U.S. Department of Agriculture Economic Research Service is forecasting a return to something closer to “normal” for food prices in 2023. At present, they are projecting grocery prices to increase between 3% and 4% over the course of 2023.
Dairy Consumption, Production, and Reflections on the Formula Fiasco of 2022
Publication Date: January 2023
Article ID: PAER-2023-05

Nicole Olynk Widmar, Professor of Agricultural Economics

Summary: Anticipated strength in demand for U.S. dairy products have led to raised expectations for 2023 milk prices, now forecast at $22.70/cwt. Total production is expected to increase in 2023, with growth in yield per cow and a slight increase in cow numbers. The infant formula situation in the U.S. continues to be closely watched; imports remain up significantly year-over-year, and we continue to explore the market and policy implications of the situation that developed in 2022.
2023 Purdue Crop Cost and Return Guide
Publication Date: January 2023
Article ID: PAER-2023-06

Michael Langemeier, Professor of Agricultural Economics

Summary: The 2023 Purdue Crop Cost and Return Guide, which is available for free download from the Center for Commercial Agriculture website, gives estimated costs for planting, growing and harvesting a variety of crops, as well as estimated contribution margins and earnings. The guide is updated frequently as grain futures prices change and the costs of…
2023 Agricultural Credit Outlook
Publication Date: January 2023
Article ID: PAER-2023-07

Brady Brewer, Associate Professor & Todd H. Kuethe, Associate Professor, Schrader Chair in Farmland Economics

Summary: Increasing interest rates, higher demand for loans, lower repayment rates, and fund availability suggest agricultural credit markets trending downward for 2023.
2023 Farmland and Cash Rent Outlook
Publication Date: January 2023
Article ID: PAER-2023-08

Todd H. Kuethe, Associate Professor, Schrader Chair in Farmland Economics

Summary: Farmland prices are expected to continue to grow through 2023. Cash rental rates are also expected to increase in 2023.
Indiana Farmland Prices Grow at Record Pace in 2022
Publication Date: August 2022
Article ID: PAER-2022-22

Todd Kuethe, Associate Professor and Schrader Chair in Farmland Economics

Summary: Indiana farmland prices grew at a record pace between June 2021 and June 2022, according to the recent Indiana Farmland Value and Cash Rent Survey. Statewide, the average per acre price for top quality farmland increased by 30.9% to $12,808; average quality farmland increased by 30.1% to $10,598; poor quality farmland prices increased 34.0% to $8,631. Across all quality grades, farmland prices exceeded the previous highs set in 2021.
Trends in Farmland Price to Rent Ratios in Indiana
Publication Date: August 2022
Article ID: PAER-2022-23

Michael Langemeier, Associate Director of the Center For Commercial Agriculture and Professor of Agricultural Economics

Summary: A standard measure of financial performance most commonly used for stocks is the price to earnings ratio (P/E). A high P/E ratio sometimes indicates that investors think an investment has good growth opportunities, relatively safe earnings, a low capitalization rate, or a combination of these factors. However, a high P/E ratio may also indicate that an investment is less attractive because the price has already been bid up to reflect these positive attributes. This paper computes a ratio equivalent to P/E ratio for farmland, the farmland price to cash rent ratio (P/rent), and discusses trends in the P/rent ratio.
Farmer optimism about short-term US farmland values weakens
Publication Date: August 2022
Article ID: PAER-2022-24

Chad Fiechter, Ph.D. Student; Michael Langemeier, Associate Director of the Center for Commercial Agriculture and Professor of Agricultural Economics; James Mintert, Director of the Center for Commercial Agriculture and Professor of Agricultural Economics

Summary: Farmers purchase the majority of US farmland. The 2017 USDA Census of Agriculture reports more than 60% of farmland is owned by farmers. Farmers’ farmland value expectations are an important driver of farmland prices.
Increasing Concern of a Bubble in Indiana Farmland Prices
Publication Date: August 2022
Article ID: PAER-2022-25

Todd H. Kuethe, Associate Professor and Schrader Chair in Farmland Economics, Mohammad Haseeb Daudzai, M.S. Student and Pete Drost, M.S. Student

Summary: The recent rise in farmland prices has many market participants concerned of a potential farmland price bubble, where the prices exceed the true value of the asset.
State of the Graduate Program, April 2022
Publication Date: April 2022
Article ID: PAER-2022-11

Dr. Nicole Olynk Widmar, Professor of Agricultural Economics

Summary: Dr. Nicole Widmar provides an update on the State of the Purdue Ag Econ Graduate Program.
Valuation of land grant university education under COVID-19: students’ willingness-to-pay for alternative study options
Publication Date: April 2022
Article ID: PAER-2022-12

Yizhou Hua, Ph.D. Candidate; Holly Wang, Professor of Agricultural Economics; and Christine Wilson, Professor & Associate Dean at College of Agriculture

Summary: Purdue’s undergraduate students are willing to pay $1545 (31%) and $384 (7.6%) less for online and hybrid options respectively compared with the in-person study option, given the basic in-person tuition rate $5000 per semester at Purdue.
A good time to understand the agricultural supply chain
Publication Date: April 2022
Article ID: PAER-2022-13

Dr. Francisco Scott, Economist, Federal Reserve Bank of Kansas City

Summary: The supply chain in agriculture is dynamic. Dr. Scott provides a few examples of how to understand demand, supply, and competition in some parts of the supply chain.
Evaluating USDA’s Farm Debt Forecast
Publication Date: April 2022
Article ID: PAER-2022-14

Pedro Antonio Diaz Cachay, Masters Student; Dr. Todd Kuethe, Associate Professor and Schrader Endowed Chair in Farmland Economics

Summary: We find that ERS forecasts for farm debt are unbiased, as the forecasts do not systematically differ from realized values. However, ERS forecasts are inefficient, as they over-react to new information.
Informativeness of USDA’s agricultural export projections
Publication Date: April 2022
Article ID: PAER-2022-15

Hari P. Regmi, Ph.D. Student; and Todd H. Kuethe, Associate Professor and Schrader Endowed Chair in Farmland Economics

Summary: USDA baseline export projections exhibits downward bias. Projections of total exports and high value commodities are informative up to year four while bulk commodities export projections are informative up to year three.
Do Government Farm Support Programs affect the Adoption of Farm Technology and Sustainable Production Practices?
Publication Date: April 2022
Article ID: PAER-2022-16

Haden Comstock, M.S. Student; Nathan DeLay, Assistant Professor

Summary: This paper finds that there may be a positive correlation between participation in the Federal Crop Insurance Program (FCIP) and time to adoption of certain Precision Agriculture Technologies (PATs).

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The Purdue Agricultural Economics Report is a quarterly publication written by faculty and staff from the Department Agricultural Economics at Purdue University.

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