“Crunch Time” In Reno
Interesting comments on our last editorial, “Economic Meltdown?” They range from “You’re crazy” to “Right On.” Interestingly, remarks from both sides of the aisle were received from what this editor considers financially astute individuals. (And some would probably say, more astute than the Shortliner’s editor.)
From last Friday’s email sent by Convention Manager Sarah Stevener, many no doubt saw that we are putting together a special session in Reno (Friday afternoon`, Nov. 7, 3:00 p.m. – 4:00 p.m.) on how the tightening credit market will affect the shortline manufacturer. Just last week, we joined with 600 other participants, in an AgriMarketing magazine-sponsored “webinar” on the credit markets. (FEMA has linked the complete webinar under “Ag Links”.)
One participant in the webinar, Richard Brock of Brock & Associates, felt that while current sales of equipment are now excellent, because of the emotional effects of the credit crisis, a few months from now there are going to be purchasers, paying high cash rents, cancel orders of equipment. He predicts that in a year from now, rather than the current equipment shortage, there will be an equipment surplus.
“Will Crisis Reach Farms? Credit Still Available But Economists Worry.” “Wall Street Mess Impacting Local Farm Community.” “Agco, Deere Fall On Concerns Credit May Limit Tractor Sales.” These are just a few of the headlines now in print. While there will be money available, it will be available only for a price.
Floyd Gabler, Deputy Under Secretary for Farm and Foreign Agricultural Services of USDA, who also participated in AgriMarketing’s webinar said that, while the farm economy is currently strong, there is a possible spillover from the general economy, including implications for the value of the dollar, exports and off-farm job opportunities. Other concerns are the possible decline in farmland values and the downward trend we are now witnessing in commodity prices. Summarizing, Gabler said that while the department is now projecting strong farm profits this year, there are many questions about 2009.
No matter whether you agree or disagree with these experts’ projections, whether or not the world’s governments assisting with their banks capital infusions, and whether the most recent U.S. government purchases of $250 billion in the U.S. financial institutions helps to expand U.S. credit markets; one thing is certain — farmers and ranchers will have to reassess all of their current operating plans, including farmland expansion and equipment purchases.
Will this reassessment effect equipment purchases in 2009? That’s the $64,000 question. But, to go on thinking that 2009 will be like 2008 because the farm economy is strong while the general economy flounders, is like thinking in 1929 that the flapper era would continue forever.
While FEMA’s special session in Reno on the credit crunch may not provide you with all the answers you might be seeking, it will at least provide some “food for thought.”
And, no matter how you market your equipment — through reps, through independent wholesalers, or direct to dealers — this convention provides you with the one annual opportunity to exchange ideas with other peers from other regions. Although because of all the economic uncertainty you may have delayed your decision to attend the Reno convention, that same uncertainty is the ONE reason you should be there.
Go to the FEMA website (www.FarmEquip.org) to register for the Fall Convention, or use the enclosed registration form. In these uncertain times, attendance in Reno makes more economic sense than ever. ❖