When Will Relief Come to Ag Economy?

The tough agriculture economy is playing out on farms throughout the United States. An article recently in the Delta Farm Press lists circumstances facing mid-South farmers: banks refusing loans to long-time farmers, veteran farmers retiring rather than risking greater loss, businesses dependent on ag laying off workers.

Greg Cole, CEO of AgHeritage Farm Credit Services, offered his views recently at the Mid-South Agricultural and Environmental Law Conference.

“The start of the current environment really began in 2014,” Cole said. “When prices fall as hard as they have and expenses don’t fall at the same rate, it sends you from an extremely good profit scenario to a very bad scenario.”

Agriculture is a cyclical business, and the current down cycle may be in place for a while, warned Cole. At the ag law conference, Cole cited a Purdue University 100-year study “that shows good times last five to seven years. Not so good times last 10 to 12 years. I’m not suggesting we’re in a 10-year downturn—I certainly hope not. But when you look at the fundamentals, we could very well be in for a five to seven year roll that started back in 2014.”

Cole said he doesn’t believe the Delta will see a return to the nightmare of the 1980s. “We don’t have the leverage today that we had in the 1980s. However, the concentration of debt is a lot more today with fewer producers than it was back then.”

While the federal safety net will help, “it may not sustain all producers through a long period of low prices and profits,” Cole said. “We could lose the bottom 25 percent of all producers in the Delta during this cycle if it extends for as long as some economists suggest. The positive news is the top 25 percent will have the opportunity to expand.”

Source: Delta Farm Press S