Even the most basic understanding of economics is that we are in business to make money. This isn?t something that agriculture has invented, and we aren?t the only ones that play by those rules. However, when we look at the financial situation that we are facing across the globe, farmers have a unique takeaway from what?s happening.
Farmers have to take out operating loans and modify their financials every year to keep up. Unlike other business entities, this is not just a company, that farm is your livelihood. You don?t earn a paycheck with insurance benefits; you are paid when the farm is paid.
So how do we survive the current economic situation when inputs are rising, interest rates are going up, and crop prices, while good, are lower than they were at their peak, and could come down quickly if we have a good 2023 growing season? Matt Erickson is with Farm Credit Services of America, and he talks to us about what he is seeing in this economic climate.
Now that must be balanced against the macro economy, especially interest rates.
While it is a few months between running planters and combines, a lot can happen. Erickson says he is looking to August to show us if we are still going to see agriculture in a demand-driven market, or if we will switch to a supply-driven market.
Erickson says it isn?t time to hit the panic button by any means. Just trust the process.
If you haven?t already, have the conversation with your financial advisors and get yourself in the best position to win this year so you are ready no matter which direction the market goes.
