Farmers in India and Latin America are more optimistic about future profits than farmers in Europe, Canada and the US – McKinsey survey

Farmers in India and Latin America have a more positive outlook on future profits compared to farmers in Europe and North America. This is evidenced by the results of a McKinsey survey.

In the first quarter of 2024, McKinsey surveyed about 4400 farmers in Europe (France, Germany and the Netherlands), India, Latin America (Argentina, Brazil and Mexico) and North America (Canada and the United States).

In North America and Europe, the majority of farmers expected their profits to be lower this year (64% and 55% respectively). Less than 15% expect profits to increase over the next two years.

In North America, the share of farmers expecting lower profits over the next two years increased by 16% compared to 2022, while in Europe this figure increased by 6%.

Optimism prevails in Latin America and India, where more than half of farmers (58% and 76%, respectively) expect an increase in profits in the next two years, compared to 42% and 37% in 2022.

The dynamics of supply and demand can shape farmers’ prospects for future profits. In the United States, corn and soybean prices are declining due to a large global harvest, falling export sales, and a significant amount of crops in storage.

In Europe, the price of wheat has fallen by about 40% since 2022, and farmers have been concerned about increased imports from Ukraine. This pressure on prices, along with recent increases in production costs, may be contributing to farmers’ negative expectations for future profits.

In India, rice is the dominant commodity. Farmers there have seen record price increases despite government restrictions on rice exports. This is likely contributing to the overall positive outlook for future earnings among Indian farmers.

In 2023, Brazilian farmers experienced a poor harvest, falling commodity prices, and increased droughts and flooding. But in a survey in early 2024, farmers said they expected better results in the next two years, likely influenced by the growing importance of corn exports to China.

“However, events that have occurred since the survey was conducted – mainly forest fires in the leading sugarcane and soybean producing regions – may have changed Brazilian farmers’ views on profitability in the near future,” the report says.

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Tags: oilseeds, India, USA, Germany, Argentina, Mexico, grain, Brazil, EU, France