Home / News / Business news / Would a crop failure ease 2014 income worries?

Would a crop failure ease 2014 income worries?

Jeff Caldwell 12/04/2013 @ 2:26pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

The farm income picture isn't as pretty heading into 2014 as it has been in the last few years. Though experts say things like maintaining consistent working capital can help buffer the pain from the downturn, farmers say they're already getting bad vibes about the income picture that the potential for $4 corn and $9 soybeans helps paint.

"Just got done at bank getting ready for next year, and man, it doesn't look great. I am afraid to say I'm just planning on breaking even, and I don't pay terrible high rent," says Agriculture.com Farm Business Talk member Panterafan. "I said to my banker that it shouldn't matter because most guys have tons of cash right now and he laughed, saying that all the cash is sitting in machine sheds in the form of green and red paint. He said his lending institution is very worried about 2014 and extremely worried about 2015."

This outlook was reflected in the most recent survey of ag lenders in the Chicago Federal Reserve district in which the majority of lenders in Iowa, northern Illinois and Indiana, Michigan, and Wisconsin said they share Panterafan's outlook.

"Crop farmers face the prospects of lower levels of net cash earnings this fall and winter relative to the previous fall and winter, as only 12% of survey respondents anticipate net cash earnings from crops to rise, and 73% expect them to drop," according to a recent report from Chicago Fed senior business economist David Oppendahl. "Heading into the fall and winter, survey respondents sense a shift in agricultural credit conditions."

Ironically, some farmers report they've heard others say there's a simple answer to the income question, or at least a critical part of it: A crop failure -- or sharply lower yields -- in the coming year that would drive prices higher.

"I think it says a lot about ag when many people in it want their product to fail so they can have a big price again," Panterafan says. "That's no shot at anyone, but isn't that odd?"

Not all agree. "I don`t think there are many that are hoping for a crop failure; just to be pragmatic about it, a person can go broke with low prices every bit as they can with low yields," adds Farm Business Talk veteran adviser BA Deere. "If we produce 2 billion bushels more corn than we use each year, prices will be cheap, and farmers will hurt."

   

CancelPost Comment
MORE FROM JEFF CALDWELL more +

Cutting Postharvest Grain Losses in Brazil a… By: 08/29/2014 @ 10:06am There's growing talk in parts of the central U.S. that once the combines start to roll this…

Drought Continues to Hammer California;… By: 08/28/2014 @ 10:27am John Steinbeck and Sonora Babb painted vivid pictures of the Dust Bowl in their novels The Grapes…

Another Rough Winter? Farmers' Almanac… By: 08/27/2014 @ 7:30am Not again! A year ago, the Farmers' Almanac, which has been around for almost two centuries…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Holiday Profit Taking Pressures Markets