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South Central Iowa | If you’re worried about going back to the low $8’s, that could be justified, but if further...:
No. To a degree, board prices below $7-$8 would create a liquidity crisis in the ag world. So much so that it creates anticipatory buying at those levels. Fundamentally, we would wipe out enough farmers with typical bases and CoP across the country, that it would create a shortage in the next crop season. Beyond and in addition, this is different than the 1980’s. There aren’t half of the farmers there were then to be bled out. Destroy half of them, cause a liquidity crisis in the Ag lending industry with foreclosures and decreased value of survivor’s collateral, and there will be 10’s of millions of acres that do actually go idle.
Inflation plays a smaller role, but $3 is like $2 and $7 is like $5. Time below those prices would be fleeting. The government will not bail us out, it would just be bloodbath, an inability to secure credit, and idle acres because not enough people can get money. Too many non-farm landlords, either investors or descendants, who wouldn’t know how to share crop and wouldn’t realize they couldn’t get a renter until it was May or June.
Before someone points it out, yes, some people would have great opportunities and be able to use cash or get credit. But at $2.50 and $6.00, there would be too few to handle all that would available. Not enough flesh in most places.
Edited by Conan the Farmer 1/24/2019 23:00
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Post trade deal (if)
