Farmers, Lenders Adjust to 'New Normal'

March 24, 2016 12:00 PM
Farmers, Lenders Adjust to 'New Normal'

With crop prices below the cost of production, farmers are feeling a financial pinch in 2016—and their lenders are keeping a watchful eye on the situation.

“We’ve got operations that are going to go into next year where they’re not going to be able to cover the cost of production and the fixed costs on this crop,” said Dick Poe of Farm Credit Mid-America.

Farmers are well aware of the situation. “Honestly, some of the growers are looking at what is going to lose them the least money per acre,” said Wayne Hurst, an Idaho farmer.

They’re looking closely at inputs and saving money wherever they can. “There’s lot of negotiations and price-checking with inputs such as seed and fertilizer (and)  seeing what products aren’t necessarily (essential)” this year,” said John Horter, who farms in South Dakota.

Such thrift is even more important than usual this year: Net farm income is projected to slip to $54.8 billion, which represents a drop of 56% compared to 2013’s record high.

With numbers like those, is rural America headed for another farm crisis? Poe doesn’t think so.

“We have people who have already seen some stress. We have people who will start to see some stress,” he said. “But we do not see (this) downturn as significant as the 1980s at all.” 

Watch the AgDay segment here:


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How does the current farm economy compare to the 1980s? Are you worried? Let us know in the comments. 

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Spell Check

GoldKey Farms
Arlington, MN
3/28/2016 03:31 PM

  Agree with Kenyon MN and Nelligh NE, give it another year of trend-line yields and the continued "strong" dollar. There will be places where corn has a $2 in front of it and soybeans will have $7's. I said this same thing to an article about a week ago, this could easily be worse than the 80's

Dick Overby
Kenyon, MN
3/25/2016 07:45 PM

  Another year of 3 dollar corn and it will be much worse than the 80's

Allan Bentley
Nelligh, NE
3/24/2016 04:16 PM

  Your right it does not compare to the 80's. Back then we could go to town get a job and that would help absorb the losses. Farmers are going to be losing $200/ acre. So farming 2000 acres you will lose $400,000. That is after losing $400,000 last year. What job in town covers that? We do not have the interest rates as high as the 80's, HOWEVER we are borrowing 10 times the amount of money to put that crop in the ground. I will agree it is not the 80's.... It will be worse.


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