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.
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