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West Chazy, New York | The first thing that happens is a percentage of the worst/weakest operations go out of business. Once enough of those have failed, the market for farm assets softens, as there are only so many cows, combines, tractors, and such the survivors can or will buy. Dealers get more willing to sell for what they have in a machine, but don't want to carry inventory. You will know when the dealers and manufacturers are hurting when they start offering very generous terms for new machines (five years with no interest; cash rebates; buy a tractor, get a loader for free). Long term it has real implications for farm succession. If there isn't enough income for the next generation, they will be more likely to work in town. That means the current owners stop expanding or upgrading, since why invest a lot in a business they will only operate for a few more years? It eventually becomes a self perpetuating cycle. A few very aggressive operators will try to take advantage of cheaper inputs, betting the market will turn positive before the bills come due. The ones who guess right will look like geniuses in ten years. The ones who guess wrong will disappear and never be heard from again. The farm magazines will publish article after article about the need to be more efficient. A few operators will try to capture higher prices by appealing to the organic/natural/save the whales types, but most of those farms are small and don't have the capital to grow, but as long as they have long hair and wives that wear cotton dresses and kerchiefs they will appeal to a select group. At the end of the cycle, those who didn't get carried away in either direction will emerge a little bigger and financially strong. There may not be as many new snowmobiles in the twenty year old machine shed, but the ones that are there will be paid for. | |
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Asking about tough farm economy times
