Farm Country Losing Sleep Over Farm Finances

October 4, 2018 02:01 PM

It’s no secret things are tough in farm country. Still, the latest Purdue Ag Barometer shows farmers are growing more concerned over worsening financial condition. In fact, farmer sentiment expressed in the survey dropped to its lowest level since October 2016, down 15 percentage points since August.

“When we ask people ‘would they say that their farm operation today is better off, worse off or about the same compared to a year ago?’ the percentage of people saying ‘worse off’ jumped from 47% to 54%,” says Jim Minert, director of the Center for Commercial Agriculture at Purdue University. “As you look at that data, notice that it's the worst reading we've had in well over a year with respect to the percentage of people saying they were worse off than a year earlier.”

In addition, 33% of producers said they expect their farms financial condition to be worse a year from now. In June only 18% of farmers felt that way.

Indiana farmer Jeff Peterson says that if Chinese tariffs aren’t resolved by the time planting decisions are made, they could sway acres away from soybeans.

“I think guys might go a little more corn and that might affect the prices later on,” he says. “That has to get resolved within the next few months. Ag lenders are watching the situation closely leading to some tough conversations.”

Allen Hoskins of American Farm mortgage says he’s not seeing a big uptick in loan delinquency rates, but that could become a reality next spring.

“I would anticipate that on the cash grain side, the delinquency may not start showing its head until February, March of next year,” he says.  

According to David Kohl with Virginia Tech, strong farmland values are keeping the majority of farmers in business through this downturn.

“We're six years in on this one, and thing that's holding us up is our land values,” he says. “If land values started coming off, we could be in some serious trouble, because land is $2.8 trillion of the $3.5 trillion farm balance sheet. It’s 81% of the balance sheet so it still gives producers the option to refinance.”

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Spell Check

Wayne A Blake
Alexandria, IN
10/4/2018 09:17 PM

  Perhaps 2012 could be a template. That year had a poor crop overall...perhaps a ¾ crop. prices went through the roof quickly. If farmers next year would only plant ¾ of the acres, they would save some seed money and could put the ¼ in green cover crops and nourish the land in the process.

Holcomb, KS
10/4/2018 09:56 PM

  Wayne hit the nail on the head. We are going to put ourselves out of business if we keep over producing. Farmers can actually control the market by uniting and start setting aside acres on there own. (no government) less work, less inputs,reduce carbon footprint, more money.

central , MN
10/5/2018 02:46 AM

  If farmers reduce acres in the USA what is going to happen? The rest of the world will pick up the slack. Brazil and Argentina are waiting to expand acres. Back in 2008 and 2009 when the largest economy in the world was going to collapse, what happened? The largest economy in the world started quantitative easing. And exports started to take off. If agriculture is going to get out of this recession we have to reduce the value of the dollar or increase usage here at home. The CRP was started back in 1986. It took until 2008 for the farm economy to prosper. The CRP did take the worse off the edge of the recession of the 1980's. But it took until 2008 for the farm economy to really take off.