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Adjusting to the New Reality

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Adjusting to the New Reality

A survey of some the nation’s top row crop producers reveals their biggest concern for 2014 is tight margins. Taken during the Commodity Classic in San Antonio last month, the survey of corn, soybean, wheat, and sorghum growers showed that 42% see tight margins as the top challenge for 2014 and an additional 22% said it was their second highest concern. Keith Lane, VP of Agribusiness with Farm Credit of Mid-America, which sponsored the survey,  says farmers facing higher input costs and lower crop prices are looking for ways to adapt, “Operators are looking for the best ways to change their practices to adapt to the new reality.”  Congruent with below-average grain price projections, the survey showed that the second biggest challenge for 2014 was high input costs, with 21 percent of growers ranking it their number-one concern and 31 percent ranking it number two. 

 

Keith Lane
Keith Lane

 

Lane says one area in which operators are not planning to cut back, however, is production, “The folks we talked to are focusing on more production not less.” He added, with lower crop prices, most growers want to increase yields to have more bushels to market, “I have not talked to anyone who is cutting back on anything related to production.”

 

This leaves equipment and land as areas where cutbacks may be made. While the red hot land market has cooled somewhat, Lane says growers are still optimistic about the long run. With interests rates low, they will continue to make land purchases, “If the farm next door comes up for sale they are still interested, but they are not so bullish that they will buy land just for the sake of buying land.”  He said most growers are well-positioned financially to handle the tight margins.  In addition, interest rates of historically low levels make it reasonable to incur debt for the right reason.

 

“Commodity prices, costs, and interest rates will always fluctuate, but growers will continue to seek a balance of growth and risk management that will sustain their business objectives now and into the next generation,” said Bill Johnson, President and CEO of Farm Credit of Mid-America. “The confident sentiment that we continue to receive at the local level, as well as at national events like Commodity Classic, is very encouraging.  Farm Credit Mid-America is here to help each grower meet his unique financial needs and goals.”



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