Ag Lenders Largely Agree on 2016's Greatest Challenge

March 22, 2016 09:02 AM
 
Ag Lenders Largely Agree on 2016's Greatest Challenge

In 1992, political strategist James Carville coined a phrase – “It’s the economy, stupid” – that helped anchor a successful presidential bid for Bill Clinton. In 2016, ag lenders are equally blunt about the greatest challenge farmers face this year.

It’s commodity prices, stupid.

That, at least, according to the latest survey results from Farm Credit directors. Farm Credit asked them a simple question – “What is the greatest challenge facing agricultural producers in 2016?” Commodity prices was three times more popular than any other answer. Here are the results.

  • Commodity prices – 64.4%
  • Input costs – 21.1%
  • Mother Nature – 7.8%
  • Farm Bill implications – 3.3%
  • Land rents – 3.3%
  • Interest rates – 0.0%

“The USDA forecasts real (adjusted for inflation) net farm income will be in the low $50 billion range annually for the next 10 years, which is down dramatically from recent highs and similar to the 1980s,” says Jeff Swanhorst, executive vice president, Credit, and chief credit officer of AgriBank. “All we know for sure is the forecast will be wrong. Farmers will make many adjustments, depending on their circumstances, and they’ll be rewarded for their entrepreneurial spirit, management and good old-fashioned hustle.”

Results mirror a 2015 Farm Credit poll, which asked the same question.

Last week, Andy Shissler with S&W Trading talked with AgDay about commodity prices, land rent pressure and more. Here’s what he had to say about where the markets could be headed next.

Want more video news? Watch it on AgDay.

Go to www.agweb.com/markets for the latest market news, analysis and commentary.

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Comments

 
Spell Check

Ag Banker
Bellevue, IA
3/23/2016 09:47 AM
 

  It's kind of funny. They are surveying farm credit lenders, when most of the new trouble credits I have been reviewing have come from FARM CREDIT. Their motto as long as they have land lend lend lend until they can't cash flow it. Most of their clients should have been advised to slow things down 2 years ago. Now they are bailing on them when they need them the most. Their are also some banks in this category too. Bottom line work with someone who understands agriculture and its definite cycles. Its not just about low rates.

 
 
d d
alcester, SD
3/22/2016 06:56 PM
 

  “All we know for sure is the forecast will be wrong. Farmers will make many adjustments, depending on their circumstances, and they’ll be rewarded for their entrepreneurial spirit, management and good old-fashioned hustle.” So is it thought that farmers in the 80's didn't have those qualities. My prediction is that a lot of farmers will be getting off farm jobs.

 
 
Farmer 32
Buxton, ND
3/22/2016 07:11 PM
 

  DD I do believe that the 500-1500 acre farmer will be getting another job. But what about the rest of the farmers that farm more and don't have time for another job. Some farmers have 3+ employees and keep them busy all year round. Another job is a good idea but just plan old getting sharper with the pencil and luck of Mother Nature will get me through this downturn. Let's hope the markets give us a chance to sell at a profit. Good luck to everyone in 2016 it's going to be a difficult one.

 
 

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