Update on National Farm Economy

(Jamie) We’re back! Now let’s join Kyle and Dr. Anderson, Deputy Chief Economist for the American Farm Bureau Federation, as they discuss the national farm economy.
(Kyle) Hi this is Kyle Bauer from Kansas City. I have the opportunity to visit with Dr. John Anderson. He is with American Farm Bureau Federation and he is an economist with them and I thought we would do a bit exploring about the farm economy around the nation because he has the opportunity to see all the way from California to New York to Florida. Right now we’re starting into a time that a lot of the country is worried about an economic, I don’t want to call it a crisis, an economic down turn in agriculture. What do you see? (John) I think that’s fair. I think we are looking at an economic downturn. We’ve come through a multi-year period where we had high commodity prices. For a lot of our commodities we’re looking at record high commodity prices. Now, we’ve come down from that and we’re on the other side of that cycle. High prices generated high returns. High returns attracted a lot of investment into the sector, not just in the United States but around the country. And that increased production and now that higher production is on the market and that’s putting pressure on prices. We’ve got a few demand side issues I think. The strong dollar has made the export business pretty tough. But overall I think most of what we’re dealing with, for most of our commodities is just the increase in global supplies, the increase in production that has reached a point where it’s put pressure on prices. (Kyle) What part of the nation are you seeing the most stress right now? (John) You know I would say immediately the cattle sector has come under as much stress as any other sector out there and that’s a little bit ironic because we started out the year really strong in the cattle sector. But from about mid-summer on we’ve had as dramatic wreck in as short a time in that sector as I think we ever see. We are looking for a bottom and I think, maybe getting close to it, but the level of stress built pretty quickly in that sector. Apart from that I would say the other areas that are probably going to have maybe a little tougher time is parts of the eastern corn belt this year, really had a tough production year. A lot of wet weather in June and July made production rough. There were some farmers that are going to end up with a short crop. At the same time market prices are going down and that’s really the worst possible situation to be in in annual crop production. We will have some eastern corn belt farmers who are in that boat. (Kyle) One thing with the cattle industry, we kind of spread the risk, spread the downturn across the entire nation for the most part. (John) Yea, that’s true. It really has I think, it probably has been a little tougher and originated in the corn belt. We got some really big front end supplies out of a lot of the farmer/feeders up there and that kind of got the system backed up. But it really has spread to everybody and it’s been a widespread downturn. (Kyle) We’ve been visiting with Dr. John Anderson. He’s with American Farm Bureau Federation. This is Kyle Bauer reporting from Kansas City.
(Jamie) Thanks for joining us. I’m your host Jamie Bloom and I hope you enjoyed today’s show. See you next week on Farm Factor – we’re here every Tuesday on AGam in Kansas.

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