It seems as though the odds are stacked against farmers and ranchers. Declining commodity prices, steep trade war tariffs and a record long government shutdown have taken a toll on American producers.
However, financial experts believe current financials are not as bad as those of the farm crisis.
A couple farm credit lenders believe there is a ?silver lining? within the agriculture industry. The silver lining being, ?Most producers are better off today than they were during the 1980s farm crisis.? Mark Jensen, CEO of Frontier Credit, explains the logistics behind this statement.
?This is different than the 1980s,? Jensen said. ?If you were to have seen the situation five-years into the 1980s – the last time the farm economy had a major adjustment or more challenged time – it is different than today. The overall debt load, on a percentage basis, is about half of what it was in the 1980s, going into this decline over the last four or five years. The overall balance sheet in agriculture was in a very different position.?
However, Farm Credit Council reports show increasing debt, as the result of declining commodity prices. Marc Knisley, CEO of AgCountry Farm Credit, expects to see more producers exiting in 2019.
?We?ll see some exits from the business. We clearly have seen some young farmers decide not to continue. We?ve seen farmers nearing retirement, of not wanting to continue, preserve equity. But for the most part, those are voluntary decisions that people are making to preserve equity,? Knisley said.
Industry forecasts suggest a quarter to a third of grain producers may fail to break even this spring. Knisley says whatever the outcome, operations will not be left vacant.
?But that ground isn?t going unfinanced. It?s not like the housing crisis, where homes were going empty for years. There are producers that will step in and take those operations,? Knisley said.
