Between the presidential election and the Thanksgiving holiday, it’s understandable if you missed a lot of farm-related news. So, ASA flagged a couple of recent articles that we found particularly interesting.
First, Bloomberg took an in-depth look at the financial struggles unfolding in farm country. The article noted that just four years after record U.S. crop and farmland values boosted purchases of land and equipment, a global surplus sent prices tumbling and farm income into the longest slump since 1977:
Betting the farm on record crop, livestock and dairy prices has turned into a losing investment for an expanding share of America’s agricultural heartland. The level of debt to income is the highest in three decades, and growers are increasingly unable to make loan payments. …
The Federal Reserve says growers are borrowing more to pay bills, repayment rates are plunging, and the number of bankers requesting additional collateral is the highest in 25 years
According to the article, while low interest rates and savings have kept farmers in better financial shape than the bankruptcy crisis of the mid-1980s, signs of stress are increasing, especially for growers who invested during the boom years. Farm income is down 42 percent from a record in 2013, government data show, and MetLife Agricultural Finance predicts farmland values will tumble 20 percent by 2018.
If there is a silver lining, it is that producers have a strong, cost-effective farm safety net to help them through these difficult times…which brings us to the second article.
In a recent guest column for Farm Policy Facts, Rep. Kevin Cramer (R-ND) examined the challenges facing America’s farmers and ranchers, and discussed the path for keeping America competitive in a global market increasingly distorted by foreign subsidies, tariffs and non-tariff barriers to trade:
Net farm income is down by 42 percent from just three years ago, the largest plunge since the start of the Great Depression.
Yet, under these very tough economic conditions the current Farm Bill’s commodity title — crafted to deal with market forces beyond a farmer’s control such as depressed prices brought on by unfair predatory trade practices of foreign countries — is helping farmers while saving taxpayer money.
Cramer also stressed the importance of creating free and fair markets for trade, and voiced his support for a Zero-for-Zero sugar policy:
I believe the sound approach to creating free and fair markets in agricultural trade around the globe can be found in the zero-for-zero legislation authored by Rep. Ted Yoho of Florida. The bill would repeal U.S. sugar policy when major sugar producing countries around the world fully repeal their subsidies and protections. The one change I would make to this legislation is apply it to all agricultural commodities.
We need to negotiate from a position of strength if we really want truly free and fair world markets.
We couldn’t have said it better ourselves.
Ultimately, sugar producers want to compete in a free-market environment that rewards the world’s most efficient producers, not the most subsidized. But until we get to that point, strong U.S. farm policies – including America’s no-cost sugar policy – give hardworking U.S. farmers a chance to withstand economic hardship and an unleveled playing field.