What, Me Worry?

While it may sound like a familiar refrain from Mad magazine’s Alfred E. Neuman, the strain of “We’re worried about ‘09" became an all too often refrain we heard during the Reno convention. This, even after an outstanding year most members had in 2008.

That sentiment was primarily the result of a fear that the credit market for both farmers and ranchers and manufacturers and dealers may be drying up. Sometimes it seems that all of us listen too much to the woes expressed by the media in the consumer economy. Just this morning (Monday) we watched as the headline on TV’s “Today” show touted that retail sales during “Black Friday” were up 7%. Nevertheless, the story went on to say that economists were concerned that sales will deteriorate during the rest of the Christmas season.

Come on! Give me a break!

We’re not trying to say that “everything is hunky dory.” We are saying that maybe everyone should stop listening to the “talking head” experts or the “nattering nabobs of negativism” as the late Vice President Spiro Agnew liked to say. As many in this industry tend to forget — there are economics and there are agricultural economics. There’s a reason these two disciplines are studied separately in higher education.

And, while we’re not saying that rural and community banks are not affected by what’s going on in the world of Citi Banks, the AIG’s and Bank Americas, these smaller banks do not have the similar mortgage and investment problems that their larger commercial brethren do. Yes — everyone, including farmers, ranchers, farm equipment dealers and manufacturers will be subject to more rigorous review of their balance sheets. Those, however, with good credit and strong balance sheets should have money available in 2009.

The U.S., and the world, has entered a different era, one not seen, even during the Great Depression of 1929. All of the rules have been thrown out. As a recent Business Week article was headlined, “Forget Adam Smith. Whatever Works.”

While some may be unhappy with the abandonment of free market solutions to investment banker’s woes with the reminder that it was World War II that got us out of the 1929 depression, not FDR’s New Deal. This time around, it’s not 25% unemployment that has depressed the world’s economy, it’s the unfettered and unregulated use of credit.

Yes, the “lifestyle,” “sundowner,” or hobby farm market is taking a hit. That’s probably to be expected when widespread credit availability, particularly from urban banking centers, and to those dependent upon urban employment choose to “follow their dreams.”

But, to the hundreds of thousands of commercial farmers who rely upon the commodities they sell — lifestyle choices do not enter the equation. And neither do loans from Wachovia probably enter the equation, either.

Yes — there are some rough spots ahead. The price of fertilizer, herbicides and insecticides, all due to the high price of petroleum (which is rapidly coming down) is a thorn in everyone’s side. The price of steel to build the productive farm machinery (which, incidentally, is also coming down) is a drag on the ag economy. The lowering of commodity prices can also have an adverse effect. This can be either a bane or a blessing depending on which end of the spectrum, livestock or cash grain, a producer may lie on.

The long and the short of it is — If you choose to rely upon Matt Lauer for your economic news, you may be making a mistake. Information on capital expenditures for farms and ranchers does not rely on the machinations of Washington’s U.S. Treasury Dept. What it does rely on is the economic justification for the right equipment in the right market at the right time. ❖