A Veteran Farmer’s Advice on Coping with Low Commodity Prices

DTN Special Correspondent Elizabeth Williams reported this week that, “Call farmer Larry Hoobler part of the Silent Majority. Like the bulk of Great Plains farmers, the 68-year-old grain producer from eastern Kansas can’t churn out much profit at today’s threadbare commodity prices. By drawing off the lessons of the 1980s farm crisis, however, this veteran crop producer is hoping to weather the cycle and perhaps even prosper.

“Banks in the Kansas City Federal Reserve report roughly 78% of their borrowers had no repayment problems at mid-year. Many of the other 22% are fixable, credit analysts believe, especially if borrowers hold sufficient amounts of equity. Hoobler believes the bulk of farm borrowers in his region possess the resources and willingness to adapt to a downturn. He also knows lenders are prepared to work with most of them, since he sits on the board of directors for Frontier Farm Credit, an eastern Kansas farm lender.”

Ms. Williams indicated that, “Most commodity grain farmers already have attempted to cut production costs, with some forgoing chemicals, lenders say. Some larger scale Great Plains irrigators are finding specialty contracts like organic alfalfa and non-GMO corn for dairies, or popcorn or kidney bean contracts to beef up their margins. Those with cash rent are renegotiating terms with landowners, to help match the slide in commodity prices.”

The DTN article added that, “If those options aren’t feasible, Hoobler recommends diversifying your income. He is a first-generation farmer who started farming in 1973 and survived the 1980s farm crisis with an off-farm job. His wife also worked off the farm.

“‘If you don’t have equity to borrow against, off-farm income is the only way to keep your farm going,’ advised Hoobler.”

This week’s DTN article also pointed out that, “Financially, [Hoobler] likes to know where he is every four to six weeks. In July, Hoobler looks at his financial records in detail and evaluates how to position himself to go into the next year. He has some corn priced for 2017 and is 30% priced on his 2016 crop.”

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