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Economist says financial pressure to continue

An ag economist predicts continued financial pressure on producers in 2017.  Dr. Paul Mitchell from the University of Wisconsin tells Brownfield some farmers will be able to cash flow and put up with lower-than-average returns on their time, land, and other resources… but many won’t make it.  “They don’t have the balance sheet to let them do that.  They don’t have the lenders.  It just won’t be a possiblity.  They’re going to have to make some hard choices and their lenders or whoever is providing them money, I think some hard conversations have already started happening.”

Mitchell says low commodity prices and high inputs have led to financial stress.  He says farmers must know their cost of production and communicate realistic goals with lenders to survive.  “If you have the capacity, lock in your prices to cover a big chunk of your costs that you know you have to write checks for if you want to be in business through this hard time.    Working with your crop insurance, you can guarantee your overall revenue per acre.”

Mitchell says too many consecutive years of low profitability could force some in agriculture to get out of production in 2017.