Friday, December 15, 2017

Things Are Still Touch-and-Go In Farm Country—Kansas City Fed Farm Credit Conditions

First up, a major piece from the Omaha World-Herald, December 12:

Continued low prices have some corn and soybean growers trying to figure out how to hang on
Farmers clean up their equipment after harvest each year. This year, some are also polishing their résumés.
The situation facing corn and soybean growers has southeast Nebraska farmer Steve Sugden looking for an off-farm job to help support his family. That includes his wife, a schoolteacher; his daughter, a University of Nebraska junior; and twin sons, freshmen in high school.
The low prices farmers are fetching for their crops don’t cover business costs at many operations. Average monthly prices for corn have been below $3.50 a bushel for over a year now; farmers received over $7 and in some cases over $8 in 2012 and 2013.
Meanwhile, Sugden said, family living expenses haven’t come down; just consider the cost of car insurance for those three young drivers, he said.
“The numbers don’t lie,” Sugden said.
Sugden said he has farming in his blood, and he’s not planning a farm sale, choosing to keep the land his family owns free and clear instead of using it as collateral on a loan to pay for next year’s farm operations.
Sugden said he’s at a crossroads.
He has company. Eastern Nebraska farm auctioneers said they aren’t seeing an uptick in farm sales driven by financial stress, but farm finance experts said Corn Belt farmers and their bankers do face another winter of tough decisions if they want to renew operating loans and keep farming next year.
Farm income plunged for three straight years from 2014, and only a slight uptick is expected this year, the U.S. Department of Agriculture said in November. Crop revenue continues to fall, however. Livestock sales are growing.
The picture can be dramatically different from one farm to the next, depending on the size of the farm, the type of crops or livestock raised, the climate and soil, marketing decisions and financial fundamentals.
As many as half of farmers and ranchers are profitable this year, Nebraska Farm Bureau economist Jay Rempe said. About a third are breaking even, he said, and the rest are “really struggling.”
Across the nation, the median farm income will drop, to a loss of nearly $1,100 in 2017. In other words, most farms will lose money.
And next year, belt-tightening is likely to continue, as economists’ forecasts call for no meaningful increases in crop prices.
One of the reasons for stagnant low prices: There is a glut of grain on the market. And U.S. farmers this coming spring are expected to plant still more acres than they did this year of corn and soybeans. Competition also is growing globally. So there’s no reason to expect prices to rise, economists say....

And from the Federal Reserve Bank of Kansas City: