Farms and the credit crunch

[Joan.of.the.Arch]

I have not been deliberately looking for news or analysis on this, but in the last few days it has been niggling at me that farms would be in trouble if this year farmers cannot finance operations in the way that has become typical.. And yikes, , that would be a problem not just affecting farmers!

Do farms owned by big corporations borrow similarly to how family farmers pretty much must do it? Even if they have been big enough to self-fund, can they still do that this year, or do they perhaps not have quite enough current assets?

What if....oh gosh...what if sufficient food crops are not planted this year due to the credit crisis?

[loulou]

In my experience, a lot of farmers did quite well last year. Corn prices were through the roof, and farmers know there are up and downs in the business, so most know to put some back for the future. A lot of farmers also prepay for their seed and fertilizer the years they do well to lower their income. Plus, there are many establishments set up to finance the needs of farmers. (Farm Credit services, USDA, etc.) Farmers are doing just fine.

[Joan.of.the.Arch]

Lucky is the farmer who sold their corn or soybean crop last summer when prices were high --$8/bu for corn and $16/bu for soybeans. But not everyone did. Corn is going for half that now and soybeans have dropped by a third. (I'm in the midwest and wake up to the farm reports on radio some mornings.) So not everyone is flush with cash and able to skip borrowing start-up costs for this year. With prices down like that bank loans probably will be less easy to get, making more farmers need the FSA guaranteed loans....Back to government (tax-payer) backing. But I do consider that necessary for the good of the country.

Besides, not all farming is corn and soybeans, thank goodness. I'm less in touch with other grains, fruit, and vegetables as they are not a huge part of the agricultural economy near me. I have no idea how things are looking for those farmers. Certainly there is nothing big in the news, but how often does farming really get substantial news coverage anyway?

[GREENBACK]

I too live in Midwestern farm country and know a lot of farmers and have yet to meet a poor one. I meet quite a few that whine about things but you look at the homes and property they have and it really makes you wonder.

I've also driven through states like Illinois where you see massive piles of corn next to grain elevators that was grown with subsidized money but there is no where to ship it so it just sits there rotting according to the locals.

[Joan.of.the.Arch]

Ah well, then see, maybe someone needs credit to build a silo or elevator.

I would not assume there were any subsidies to grow the corn, though.

[GREENBACK]

I'm not sure how it works with the subsidized money but I hear a lot more is grown than is used and I've seen some evidence of that. Seems to be a bit of a secret though.

[mommyof4]

I live in a rural area, and many of our friends, family, and neighbors farm. They have all told me that they have had no trouble getting loans for this next years crops. Thank God, or else we'd all be in a big heap o'trouble if the farmers couldn't afford to plant their crops.