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A Brighter Farm Economy
A common question that farm lenders are getting: What do you see for 2020? After five-years of losses and tight margins in the ag economy, perhaps there is some light at the end of the current tunnel.
Jim Knuth is a senior vice president with Farm Credit Services of America and says they’re guardedly optimistic. One factor in the optimism is trade agreement progress.
"In 2019 we didn’t have much progress, we had a lot of talk, we had some speculation but at the end of the day nothing really happened. Trade agreement progress makes us guardedly optimistic," says Knuth. "And, we like to look at stocks-to-use ratio because it combines both supply and demand factors rather than simply looking at demand or simply looking at supply. They’re much better than we anticipated just a few months ago."
Interest rates have been low and Knuth says it’s likely long-term rates will remain stable through the year. Land values have also shown stability, and he expects that trend to continue.
"The fact is, our land is our most valuable agricultural asset. We’re guardedly optimistic about how that’s going to continue to act in 2020," he says. "Here’s our comment on the weather: Can’t be worse. I guess theoretically it could, but boy we had tough planting, tough harvesting, so again we’re guardedly optimistic our weather will be better for farmers in 2020."
At the end of the day, the producers that increase their business, financial, and marketing acuity will be rewarded.