Good Feeling About Financial Health

July 30, 2008 07:00 PM
 

Sara Muri
, Top Producer Business & Crops Online Editor
 
On a recent survey of Farm Journal Media subscribers, farmers and producers were asked their opinions on the overall farm economy and how confident they were in their own farm's financial health.
 
The results were:







Why did these results occur? We asked Top Producer columnist Bob Utterback and Iowa State University agricultural economics professor William Edwards for their insight on the survey findings.
 
Bob Utterback's thoughts:
  • The concern about the general health of the agricultural economy moves beyond just grain. The livestock industry has been hurt hard with higher feed cost and higher input cost with limited gain in selling price of pork, beef and poultry.
  • The concern about long-term price rises in metals and fertilizer has many producers concerned that even with higher grain prices when things eventually turn down the margins could get really tight.
  • It's been my experience that farmers who own their farms or are buying a large percent of their production base is much more excited about the future than the producer who is renting and is seeing the cash rents exploding. The producer who based his operation on cash rents has no choice; he must pay the higher rents because he's put his money into machinery and needs to keep the economy of scale balanced. But, just when things start looking good, all the input costs go up.   

William Edwards' thoughts:
  • I think most farmers feel that they have some control over the financial health of their own farm, whereas they have no control over the overall farm economy. The financial health of their own farm would be highly dependent on their leverage situation and financial reserves. Additionally, many farmers, especially crop farmers, have had enough extra cash to pay down debt and add to savings in recent years.
  • Farmers' views of the overall farm economy would likely be more a reflection of their expectations of prices and costs in the near future, which are pretty uncertain
     

 
You can e-mail Sara Muri at smuri@farmjournal.com.
 

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