National Corn Growers Association Chairman Ron Litterer and other leaders in agricultural economics talked about the impact of the current economic crisis on the farming sector in a webinar last week, held by AgriMarketing magazine. In his remarks, Litterer discussed the impact of the crisis on demand for corn and the higher input costs growers face.
“Even before this crisis hit, growers have been faced with higher operating capital requirements due to rising input costs and marketing strategies,” Litterer says. “Analysts are concerned about the impact of the crisis on demand for corn. With higher production and lower demand, pricing can affect margins.”
As examples, Litterer cites how costs for fertilizer and cash rent for land have skyrocketed along with corn prices. Only in some areas have costs come down to a more manageable level, such as diesel fuel.
Other speakers represented Wells Fargo Bank, the USDA, Farmer Mac, the American Bankers Association and Brock Associates. The bankers reported that due to the three prior years of profitability, credit for agricultural producers should be adequate. However, they reported that because of the higher risks associated with agriculture, including the increasing extremely volatile grain markets and much larger operating costs, they and bank regulators will be more closely examining their portfolio. More highly leveraged agricultural producers – or those determined “at risk” – will probably have to pay more for credit.
More than 600 people and organizations listened to or viewed the webinar. Click here to view or download the presentation.