Ag economy impacting farmers, implement dealers and others

Dec 13, 2016

Credit Brian McGuirk / Flickr Creative Commons

Kansas Agland is taking a look at the agriculture economy from the perspective of farmers and farm implement dealers, who are finding ways to adapt.

An overabundant supply in wheat, corn and every other crop has pushed the prices of those commodities below what many farmers need to break even.

As Kansas Agland reports, the Kansas Farm Management Service in May reported that net farm income in 2015 hit a 30-year low and just last month, the Federal Reserve reported that farmers are borrowing more to cover their expenses and that repayment rates are decreasing.

Wheat and corn in 2016 were record crops resulting in bin-buster harvests throughout the state of Kansas making it difficult for grain elevators to keep up, resulting in piles of grain being stored outside, as farmers wait for market conditions, and prices, to improve but just last week, red winter wheat was priced at just $2.66 per bushel.

Low grain prices aren’t just affecting farmers, but also seed suppliers and farm implement dealers.

Jim Sipes, a veteran southwest Kansas farmer, told Kansas Agland that wheat seed sales at his Stanton County operation have plummeted because farmers are saving their own seed to mitigate expenses.

After a wet spring and summer, the drought in Kansas was as good as gone, but parts of the state are back in moderate to severe drought since little to no rain has fallen in Sipes’ field since September so the winter wheat planted at that time, hasn’t even emerged out of the ground yet.

Meanwhile, Kansas Agland reports that large farm equipment sales, including combines and tractors, are down more than 20 percent from last October, according to a report from the Association of Equipment Manufacturers.  

Caterpiller’s third-quarter sales and revenue dropped 16 percent and AGCO, a manufacturing plant in Hesston reported a drop in net sales of 8.5 percent for the first nine months of 2016, compared to the same period last year, according to Kansas Agland.

All involved in the ag industry are comparing the current state of affairs to the 1980s farm crisis that much like today, as Corn and Soybean Digest reports, resulted from record production that forced prices down, and shot farm debt up.

As farmers and others in the ag industry tighten their belts, the ripple effect will most certainly affect other aspects of the rural economy.