Grain Storage to be Costly with Additional Interest Rate Hike

Another interest rate hike from the Federal Reserve last week marks the ninth consecutive rate increase in an attempt to curb inflation. The federal-funds benchmark range is now between 4.75% and 5%, the highest level since September of 2007.

Federal Chair Jerome Powell said this hike might be the last, nodding at last week’s banking stress. But the hike could put a squeeze on farm profitability this year, particularly as it relates to on-farm storage. Commodity prices will determine how much the increased interest rates impact profit. Interest on short-term loans will also significantly affect farm revenue.

Last year, short-term interest rates were about 4%. This year, they’re around 7%. That means farmers today will pay 3.8 cents per month to store grain in bins, up from 2.1 cents last year.

Read more on interest rates here.