09/29/08 Facing Economic Hard Times

Facing Economic Hard Times. I'm Greg Martin with today's Line On Agriculture. Everywhere you look the big news is all about the economy. The Dow is up, it's down. Another bank needs bailing out. Freddie Mac and Mae are rebounding. Farmers and ranchers all across America are scratching their heads and wondering if there will be a future in the family farm. Even the new Farm Bill is not all that comforting when you see all the problems the politicians are having with getting various portions up and running. American Farm Bureau economist Jim Sartwelle says like the rest of the country, farmers and ranchers will be face tighter credit with much stricter conditions. SARTWELLE: We are very reliant across agriculture on lines of credit because we only sell our products once a year. Unlike the rest of the economy, though, agriculture, for several decades now, manages to clear their books at the end of the year where the rest of us seem to let debt pile up around our ears. Sartwelle points out that farmers often borrow money each year to buy seed and get their crops in the ground in the spring. Plus, the economic problems have led investors to take money out of the commodities markets. SARTWELLE: Folks out there in the investment world have pulled their claws back in a little bit. It's taken money out of the commodity market. It's lowered commodity prices some and we've seen the prices of almost all of our crop and livestock deals go down. At the same time, input costs have not gone down. SARTWELLE: Most of our inputs are petroleum based or are actually petroleum products. As we see things get a little bit tighter as oil prices creep back up over $100 that is going to have an effect on the margins for our producers out there for crops and livestock both. Agriculture, according to Sartwelle, will probably ride through this storm in good shape. SARTWELLE: In agriculture we've been very responsible. Coming out of the ag credit crisis of the 80s we've taken our debt to asset ratios in agriculture down to numbers that we've never seen before, very, very low. Agriculture seems probably better put that most sectors of the economy to weather this storm. If you look at the sources of operating capital that our producers need, we look at where they go to get their land money, the federal land bank with the farm credit system, those systems are all in very, very good shape. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.