Stories of Stressed Farm Economy Persist

by | Apr 26, 2016 | HAT News Feed

Hoosier Ag Today by: Andy Eubank

Stressed farm economy

Senator Chuck GrassleyStories of stress in the farming community continue to crop up as producers struggle with low prices, a strong dollar, and depressed export values. The farming crisis hasn’t reached a “critical mass” yet, but Iowa Senator Chuck Grassley says the stories of economic stress aren’t going away.

“We’re hearing a little bit from bankers,” he said. “We’re hearing isolated instances of farmers, and the 800 number where farmers in trouble can call in and ask for help or get advice, that they’re getting a few more calls now.”

Grassley said both land renters and owners are being hit, though renters are getting hit harder.

“It’s the people that have paid the extra high cash rent that some farmers, even last year, had to let some of that land go back to the landlords to rent to somebody else because they couldn’t handle it, there’s a little bit of that this year. Then farmers that are farming land that they own or partially own, I haven’t heard of complete farmers going out of business, but I have heard that some bankers are requiring them when they borrow operating money to capitalize it in the land.”

American Farm Bureau President Zippy Duvall told a House Ag panel recently that there’s no farming crisis “today,” but rather, one is “on the horizon.”

USDA forecasts a one-third drop in net cash farm income this year, compared with 2013. Farm operating debt has also grown by one-third since 2012, as farmers draw down their cash and equity to survive.

Commodity prices have been rallying in recent weeks but where will they go next? Darrel Good, Agricultural Economist at the University of Illinois says in the short term, much will depend on how much corn and soybean production potential has been reduced in Brazil and Argentina.

“The magnitude of that reduction will not be known for a while but some evidence of the market’s expectation about the crop size will likely be revealed in the pace of U.S. export sales,” Good said.

Combine good demand for last year’s crop, production problems in South America, and what some see as a better than average chance of a production problem in the Corn Belt this summer, and there could be some good marketing opportunities ahead.

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