Farm Credit Leaders Identify Commodity Prices as the Greatest Challenge Facing Ag Producers in 201603/25/2016
Commodity prices are the greatest challenge facing agricultural producers in 2016, according to a poll of Farm Credit directors from America’s heartland.
More than 64 percent of the directors — from the boards of 17 Farm Credit lenders in 15 states and of AgriBank, their St. Paul-based funding bank — said commodity prices are the greatest challenge facing ag producers this year. The directors, most of whom are also farmers or ranchers, indicated the next biggest challenges are input costs (over 21 percent), and Mother Nature (nearly 8 percent). Farm Bill implications and land rents were each cited by approximately 3 percent of the respondents.
“The USDA forecasts real (adjusted for inflation) net farm income will be in the low $50 billion range annually for the next 10 years, which is down dramatically from recent highs and similar to the 1980s,” said Jeff Swanhorst, executive vice president, Credit, and chief credit officer of AgriBank. “The USDA 10-year baseline forecast assumes no domestic or external shocks to global ag markets and is largely driven by prices for corn and other key commodities, which have fallen significantly over the last couple years. All we know for sure is the forecast will be wrong. Farmers will make many adjustments, depending on their circumstances, and they’ll be rewarded for their entrepreneurial spirit, management and good old-fashioned hustle.”
The results are similar to the same poll a year earlier, when the top challenge also was commodity prices.
AgriBank conducted the poll March 8 among directors attending the AgriBank 2016 Annual Meeting in Phoenix, Ariz. The 17 affiliated Farm Credit Associations affiliated with AgriBank provide agricultural loans in a 15-state area stretching from Wyoming to Ohio and Minnesota to Arkansas. Farm Credit is a top source of loans for agriculture and rural borrowers in these states. Ninety directors participated in the poll.