The Farm Economy: Overall Trends
Inflation is starting to show up in many input costs. One of the major cost increases is energy and related expenses. Crude oil is expected to average $68.46 per barrel for 2018,¹ an increase of 35 percent over 2017. This is forecast to bring average gasoline prices to their highest level in four years. Anecdotal reports indicate that prices for supplies from plastics to cardboard boxes have increased. Tighter labor markets and increases in some state minimum wages have contributed to rising labor costs. Transportation costs (and availability) are a factor as well due not only to fuel costs, but a continuing nationwide driver shortage and the implementation of electronic driver logs for long-haul truckers.
Continued tough rhetoric between the U.S., China and other nations about trade and tariffs has many in the agriculture community concerned. Many sectors of U.S. agriculture, forestry and commercial fishing are highly dependent on exports. Even for those producers whose products are not directly exported, the price they receive domestically may be heavily influenced by international trade. In addition, prices for some imported goods from China and Europe have already started to reflect import tariffs.
1 U.S. Energy Information Administration, West Texas Intermediate Crude Oil