After the fall-off from record-high corn, soybean and wheat prices in 2012, Purdue economist Mike Boehlje says growers can expect to “bounce along close to break-even for five to 10 years,” reports DTN. Based on economic cycles in agriculture since 1900, Boehlje said at a Kansas City Federal Reserve conference, the good times run for five to seven years and the “not so good times” persist for 10 to 12 years. DTN quoted Boehlje as saying, “We’re going to have some vulnerable agricultural borrowers out there. Equipment dealers may be the most vulnerable …. We lost 25% of the equipment dealers in the 1980s. We will see another washout in dealers in the next two to three years.”
For farm operators, Boehlje said the greatest stress will be on growers who rent most of their land. “Those who have aggressively bid up cash rents and rent most of their land will have the most trouble,” he said. “The only way it’s going to get better is cost reduction. Improvement will not come on the price side. Farmers will have to pull back on capital expenditures, which they have done.” Boehlje advised a more parsimonious approach to fertilizer usage.
Farm liquidity is highest for older, longer-established farmers, says a farmdoc daily post that compares liquidity in the past three years with averages for 1996-2006. “Some think that we are heading into an era that might be similar to the 1996 to 2006 era. With the information in today’s article you can make that decision for yourself,” write Brandy Krapf, Dwight Raab and Bradley Zwilling of U-Illinois. Liquidity ratios for all age groups has declined since 2012.