Interest Rates and Agriculture

Interest Rates and Agriculture

Bob Larson
Bob Larson
From the Ag Information Network, I’m Bob Larson. Soaring interest costs are cutting into farm profits this year, and one Ag senator blames administration spending policies.

Iowa Republican and farmer Chuck Grassley complains, the administration’s spending and borrowing is hurting farmers …

GRASSLEY … “Bidenomics isn’t being very well received in the farm community, and some of that’s directly related to the interest rates, which wouldn’t be necessary, if we hadn’t had the inflation of last year, that was caused by all the appropriations that they did in 2021.”

Some of that spending went to help producers—(B) billions for conservation, renewable fuels and rural broadband.

USDA says higher interest costs by the Federal Reserve to stem inflation has now replaced fuel, fertilizer, pesticide and labor as the main driver of farm inflation …

GRASSLEY … “If they’re stuck with that interest rate for the next 12 months, they’re significantly hurt. But I think interest rates are going to come down, so if they’re on a floating interest rate thing, they may benefit from that before the end of the year…if not, they’ll have to wait

‘til 2025.”

When interest rates may come down again. But the Fed is keeping new rate hikes on the table if inflation doesn’t cool more.

And while prices for fuel and fertilizer have eased since the pandemic and the beginning of the war by Russia in Ukraine, they’ve not returned to earlier levels.

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