I had the opportunity in 2008, maybe the bad fortune, to attend a number of agricultural meetings in which financial experts made observations and predictions about the economy — both for agriculture and U.S. industry in general.
I remember one meeting at Clemson University early in 2008 at which one of the most highly sought after agricultural economists in the country attested, “We are not in a recession and are not headed into a recession.”
Evidently, some folks in the financial community neglected to read that script. Or, maybe financial forecasting is the one recession-proof industry. Sometimes it’s hard to know who “we” are.
Perhaps the best financial observations I heard in 2008 came from Andy Lowrey. Southern as a butterbean and sharp as a tack, Lowery quipped, “there are two kinds of economists who are making financial forecasts these days — those who don’t know and those who don’t know they don’t know.”
Lowery, who in addition to being a very entertaining speaker, is President of AgFirst Farm Credit Bank in Columbia, S.C. says the scariest thing he knows about today’s financial woes is that the center of the financial universe going into 2009 is in Washington D.C.
Two messages that were consistent over the financial presentations I heard in 2008 are 1) agriculture is not in as bad a financial situation as other segments of the economy and 2) farmers who benefitted from good crops and good prices in 2007 and 2008 took steps to strengthen their long-term financial situation.
I believe both of those assessments to be true. Most growers I talked to complained about having to spend more money to grow a crop, but not about the availability of money.
Going into 2009, it appears farmers with a good record of success and a history of profitability will have little problem financing a crop. Money for short-term items like seed and fertilizer appears to be readily available. Money for long-term investments in equipment and land appear to be less available.
Dave Downey, a long-time Purdue University agricultural economist, perhaps has the best outlook for the future of farming. He points out that the world population continues to grow, but more importantly the world middle class continues to grow.
As the middle class grows, so grows the demand for high quality food and fiber. Where is the world’s highest quality food and fiber grown? Much of the best grain, cotton, tobacco and peanuts is grown in the U.S.
Those folks in the ‘center of the financial universe’ would be wise to keep America’s food and fiber producing potential in mind when making financial decisions that ultimately filter down to all segments of the economy, including agriculture.
We in the United States of America will subsidize food — that’s a given for any developed country in the world. The question is where will the subsidies go?
If the bailout — to use a popular 2008 buzzword, goes to the financial institutions that finance agriculture or to the grain, seed and fiber merchants who buy agricultural crops, more and more U. S. farmers may see little incentive to continue taking the high financial risks and working long hours to achieve little financial gain.
I’m all for Ford and General Motors to continue to produce cars. I’m even hopeful that financial institutions, like Lehman Brothers, can make a comeback. I’m all for all segments of the U.S. economy to do well.
But, at the end of the day’s work, when I come downstairs from a hard day slaving over an ornery computer and trying to make something readable out of the English language, it’s not a car ride or a loan I’m hungry for — it’s FOOD.
I’m a long way from smart enough to figure out how to insure our food supply, but I am sure a good way to start would be to make our farmers more profitable and to convince the older ones to stay in it and make financial conditions more conducive for new ones to get into farming.