Posted 11/12/2012 12:43 (#2692952) Subject: Asking about tough farm economy times
Some of you have lived through pretty tough times. I'm just wondering what can/will things look like if the economy skids/grain prices drop, etc. I see farms that have 5-10K acres, and don't own a single tractor. Obviously that is not alot of staying power. I'm looking at cotton and peanut budgets that don't have any profit/ return to management, and suspect we are one good crop away from the same in corn and beans. Obviously in the long run, return to land may come down, and that really leaves alot of room in an overall budget. Maybe that will do all the work leaving some for management/interest/principal, but that doesn't happen overnight. Probably farms will bankrupt before that, in my mind. We had one local large farm that declared bk recently, and just seemed to shake it off, and get bigger. I don't think that will be the norm.
And like the post on market talk, one farm "outgrew" several banks before what sounds like default. I have this feeling there wont be any lending to help other farms grow into the voids left behind by these big boys. I guess I dont want this in market talk, because I dont want to debate the likelihood of it happening, etc etc, but how did things transpire, and from your viewpoint, how will things look if prices drop/zero interest ends/etc.
Also, all the weight for farmers is being tied into insurance programs all tie into CBOT price, so under the wrong conditions, the best you can do is insure a loss. Do you think some govt program would "bailout" big indebted farming to maintain status quo, and how long will it take for that to happen/will these guys be standing one year into it to take advantage of whatever program props them back up?
This isn't meant to be a hit on big farming and I hope it isn't perceived that way., but I would just like to discuss what kind of repercussions we might see given the "new farm economy."