Exhibit 2: Federal Planning Bureau CPI Chart for 2023-20243

The USDA Economic Research Service (ERS) projects food prices “to grow more slowly in 2023 than in 2022 but still at above-historical average rates. In 2023, all food prices are predicted to increase 7.5%, with a prediction interval of 5.5 to 9.6%. Food-at-home prices are predicted to increase 7.8%, with a prediction interval of 5.3 to 10.5%. Food-away-fromhome prices are predicted to increase 8.3%, with a prediction interval of 7.2 to 9.3%.”4

Consumers who lose jobs or have job pay rates unable to keep pace with these inflationary rates will be financially stressed in the short term.

The inflation impact on farm businesses could include:

• Potential over-inflated values on land and other capital items, livestock, inventories and supplies, and pre-paid inputs. These impact the net worth on the balance sheet.

• Net worth growth as a result of inflation rather than earnings.

• The expected cost consumers will pay for food will increase while the net income at the farm level is expected to decrease.

The CBO projects the growth of real GDP in 2023 slowing significantly to 0.1%, primarily due to sharp increases in interest rates during 2022. For 2024 through 2027 the CBO expects a moderate 2.4% GDP growth rate.5 Exhibit 3 provides a historical chart of GDP from Trading Economics.

3 Consumer Price Index – Inflation forecasts. Federal Planning Bureau. https://www.plan.be/databases/17-en-consumer_price_ index_inflation_forecasts#:~:text=On%20the%20basis%20of%20these,2022%20and%202.44%25%20in%202021

4 Summary Findings – Food Price Outlook, 2023. Economic Research Service, USDA. https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings/

5 The Economic Outlook for 2023 to 2033 in 16 Charts. Congressional Budget Office. Publication 58880. 2023. https://www.cbo.gov/system/files/2023-02/58880-Economic-Outlook.pdf

Exhibit 3: United States Full Year GDP Growth – 1998-20226

How does agriculture contribute to GDP? According to USDA Economic Research Service (ERS), in 2021 agriculture, food, and related industries had a 5.4% share of the GDP. The output of America’s farms contributed about 0.7% of U.S. GDP. Exhibit 4 from USDA ERS shows the value added to U.S. GDP by agriculture and related industries. This contribution will continue.

6 United States Full Year GDP Growth. Trading Economics 2023. https://tradingeconomics.com/united-states/full-year-gdp-growth

7 What is agriculture’s share of the overall U.S. economy? USDA ERS - Chart Detail

The CBO projects short term interest rates will increase through the first half of 2023 then gradually decline beginning in late 2023.

Interest rate increases have already significantly impacted farm level cash flow, actual and projected. Projections for new capital investments requiring borrowed funds show more difficulty achieving residual cash levels needed for debt service. In addition, maxed out variable rate operating loans or lines of credit are seeing interest expense doubling compared to previous years.

As of May 3, 2023, the Bank Prime Rate, according to Federal Reserve Bank Economic Data (FRED) is 8.25%. One year earlier, May 5, 2022, the rate was 4.0%. There were seven interest rate increases in 2022 and three rate increases thus far in 2023. To put the current rate in perspective, since 1999, the current rate is the third highest rate in the past 22 years. Exhibit 5 shows the Bank Prime rate from 1999 to 2023. However, looking back over a 50-year period, the current bank prime rate is more of an average rate from 1974 into 2023. Exhibit 6 shows that the Bank Prime rate peaked in the early 1980’s around 22%.