Tom Lutely of the Billings Gazette has a story on their website about the state of the agriculture economy according to state agriculture economists in Montana. Despite what the current recession indicates with regards to agriculture, the economists did note that things are better for farmers than if they lived in the city, because ‘“Agriculture in general is doing better than the rest of the economy,’ said George Haynes, Montana State University economist.”Still, that statement is of little solace to dairy and hog farmers who are struggling with high feed prices, low commodity prices, high transportation costs, and an influenza breakout. Additionally, grain farmers in the Midwest and Southeast probably also find little comfort in that statement as they’ve been dealing with pest outbreaks and now a very wet, and late, harvest.
Haynes, at a conference on farm economics and health care in Bozeman, Montana on Thursday told the attendees that farms are on better financial footing than the rest of the economy. The reasons? “Farm property values remain strong. Farm prices for key products such as cattle and grain are on par with, or better than, the 20-year averages. And earnings from town jobs, crucial to most farms income, have been stable.”
As Lutely accurately points out, this is much better than the situation in industries like banking and real estate. One concern that remains is the availability of credit to farmers whose crops are livestock did not perform as expected this year for a variety of reasons. To read a detailed report on farm credit by Danny Klinefelter, Professor and Extension Economist with Texas AgriLife Extension, Texas A&M University, click here.
One development in the recession that is bad for agriculture is the spending habits from consumers are shifting. While consumers are eating as much as they normally do, the foods they are eating now are cheaper, and of lower quality. This is not good news for higher costing produce like organics and free-range livestock products. Still though, like any business, as long as farmers can continue to pay bills they will be able to weather this economic storm.
Opening up foreign markets, like the recent announcements involving China and Taiwan, could be one key to keeping the farm income going. To that end, the WTO Doha Development round has taken on additional significance for agriculture. Additionally, as with other businesses, farmers still need to be able to access affordable credit to keep operations viable. The banking industry has been stingy with credit since the economic downturn. How the credit situation will affect farmers in the coming years will be an issue to keep an eye on.
To read Lutely’s article for the Billings Gazette online click here.
Posted: 11/13/09
