Farmer predicts worse food shortages and higher prices in 2023 amid inflation, drought and rising interest rates

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Drought, supply chain shortages and rising cost of doing business have led to a tough 2022 for US farmers, but 2023 could be even worse, a fourth-generation dairy farmer said.

“I definitely think we have a food security threat,” Stephanie Nash, a Tennessee farmer and agriculture advocate, told Fox News. “I believe that 2023 will be difficult. Worse than this year.”

Food prices outpaced headline inflation in 2022 as food prices in November showed a 10.6% year-on-year increase while headline inflation reached 7.1%, according to the Bureau of Labor. Statistics.

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Several factors contributed to the rise in food prices, including shortages of fertilizers and fuel, extreme weather and rising interest rates in an industry that relies on debt financing, Nash said.

“2022 was a very difficult year,” said the 29-year-old. 🇧🇷I think there will be a lot of shortages next year for sure.”

“We are going to have a shortage in the supply chain, we are going to have an increase in our food [prices] in the grocery store,” she added. “I don’t think it’s going to go down anytime soon, and I think Americans are really going to be in trouble with their wallets.🇧🇷

Most American farmers take out short-term, variable-rate loans each year to pay for everything from seeds and fertilizers to livestock and machinery, according to the Department of Agriculture. As a result, the Federal Reserve’s aggressive interest rate hikes from 0% to 4.25% increased the cost of farming operations.

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🇧🇷You have family farmers and ranchers who can’t pay their bills,” Nash said. “You talk about borrowing – that’s a big problem.”

“Food costs are increasing, our operation’s overall production is increasing,” he added. “We have to be able to get paid more to do that.”

Total agricultural sector interest spending is forecast to reach nearly $26.5 billion this year, nearly 32% more than last year, according to USDA data. Due to higher costs of fertilizer, fuel and land, farmers must decide whether to cut back on their crops and livestock or hold on as they struggle to pay off larger loans, according to two dozen farmers and bankers interviewed by Reuters.

“We see products in the supermarket increasing and I think a lot of people don’t understand that,” Nash said. “We are not the ones pushing to increase, we are earning less than ever.”

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One of the worst droughts the country has seen in decades is also helping fuel food inflation. As of Tuesday, 53.2% of the lower 48 states were in drought, according to the US Drought Monitor.

“I think it’s a big threat to the United States: weather, drought and water,” Nash told Fox News. 🇧🇷We haven’t really started any new programs to help farmers with the devastation across America.”

Severe drought and wildfires have caused farmers across the country to cut back on harvests and livestock sizes.

Severe drought and wildfires have caused farmers across the country to cut back on harvests and livestock sizes.
((AP Photo/Noah Berger))

“There are a lot of great programs out there that try to help farmers when they get sick or maybe a death in the family, but the government doesn’t really capitalize on the devastation,” she added.

Nearly three-quarters of farmers have seen a reduction in crop yields due to drought, according to the 2021 American Farm Bureau Federation survey of American food producers.

Likewise, two-thirds of farmers and ranchers reported selling animals, with average herd size expected to decline by 36%, the survey showed. The biggest herd declines are in Texas (down 50%), New Mexico (43%) and Oregon (41%), showing the wide geographic distribution of distress.

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“Look at Texas, how big they are in the beef industry,” Nash said. “It’s a very sad situation to be in when ranchers have to sell their cattle so aggressively.”

She said independent farmers need additional support to stay afloat.

🇧🇷We have to get paid more to do this and stay in the family farm and ranching community,” Nash told Fox News.

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