Market News

Recovery sluggish, but beneficial to farm economy

An official with the Federal Reserve Bank of Kansas City calls recovery from the recession sluggish, but he says it should still benefit the farm economy. Omaha Branch Executive Jason Henderson says the general economy is expected to grow only three percent this year, but he says even that will allow consumers to help the farm economy.

“As they purchase more food and buy more high-end foods, it’ll help domestically, but a global economic recovery should also strengthen U.S. exports,” Henderson told Brownfield following a presentation at the FAPRI Outlook Conference. “The combination of rising consumer demand and rising global demand should help farm prices and farm incomes.”

AUDIO: Jason Henderson (5 min. MP3) 

Better commodity prices have resulted in rebounding farmland values. Henderson says farmland is high and it’s going up.

“One of the questions going forward [is] will [land prices] sustain themselves at these levels, or what’s their future path; could they even go higher?” asks Henderson. “I think a lot of depends upon the profitability of the sector and what demand does globally.”

One of the biggest risks to the farm economy, according to Henderson, is that farmers are tempted to pile on too much debt at current low interest rates. Where possible, Henderson advises producers to lock in interest rates on loans.