Tips For The Economic Downturn

At the recent American Bankers Association Ag Bankers' Conference in Indianapolis

Purdue University Ag Economist Dr. Jason Henderson provided some tips for ag producers during this period of lower commodity prices. He begins with interest rates

Henderson: "So I think we are at the time period that interests rates are going to start to rise. I think going forward it will be slow and steady. We still have a lot of uncertainty and a lot of head winds in the U.S. economy but you look at some of the adjustments and a lot of federal bank presidents and lot of commentary of out that says it is time to adjust and December may be the start of it. It is all going to depend on inflation. If inflation is around that 2 percent target — that the federal reserve has — it will be slow and steady coming out over the next couple of years. At the end of the day, I think slow and steady wins the race."

Henderson continues with specific advice.

Henderson: "The number one thing they need to do is build relationships with their bankers. Figuring out how to work with them and partner with them manage things moving forward. I think they need to locking in long-term debt. In this aspect of increasing interest rates, they need to think about their cost structure. They need to look at their risk management plans — and that isn't just commodity marketing — but crop insurance and those different things all aspects of it. When they make investments — because I think the future is bright — they have to do it where it is really focused on productivity; not just because of convenience. How are they going to generate the returns to agriculture."