Farmers Navigate Risk in Low Price Environment

Bloomberg writers Alan Bjerga, Cindy Hoffman and Laurie Meisler reported this week that, “The fall U.S. crop harvest has finished, and it’s a record. That’s the problem.

Oversupply has pushed wheat prices to decade lows, while corn is at less than half the price it fetched in 2012. Cattle and hog prices have also plunged, pushing up farm debt and making some farmers wonder if they’ll be able to stay afloat.

“Much of their fate rests with President-elect Trump and a new Congress, which will be tasked with crafting the next farm bill, the trillion-dollar, twice-a-decade behemoth that sets farm subsidies and broadly shapes the day-to-day lives of farmers. For them, even the margins can make a big difference to their financial reality.”

Graphs From Bloomberg News

The Bloomberg item noted that, “While farmers are putting faith in new markets—from increased exports to China to higher domestic consumption of organic foods—boom times may be tougher to achieve than they were a decade ago. Consumption of ethanol, which pushed up grain prices in the past, has plateaued. So has the price of land, which is used as collateral for loans. Meanwhile, debt levels are rising.”

The Bloomberg article added that, “Exports and farm aid have helped farmer balance sheets—but both have their limits. Free trade is a double-edged sword, giving farmers new markets while exposing them to foreign competition. Meanwhile, farm payments are rising—but too much of an increase will make them vulnerable to federal-budget demands.”

This entry was posted in Agriculture Law. Bookmark the permalink. Both comments and trackbacks are currently closed.