News

House Ag Committee hearing focuses on rural economy

The House Ag Committee kicked off discussions ahead of the upcoming farm bill debate with a hearing on the Rural Economy.

Reports show that 1 in 10 farms are now highly or extremely leveraged with actual debt approaching levels prior to the 1980’s farm financial crisis.

Chairman Mike Conaway of Texas says he’s concerned that the current ag economy is headed down the same path.

Nathan Kauffman with the Omaha Branch of the Federal Reserve Bank of Kansas City says the 1980’s was a liquidity crisis that turned into a solvency crisis.  “We do have some of those concerns around liquidity today,” he says.  “But as I noted debt-to-asset ratios remain relatively low and historically low.  If we were to see more of a decline in land values than what we’ve seen so far – that would be an additional risk to the farm sector to solvency.  Where we haven’t seen those types of bankruptcies yet.”

Livestock economist Scott Brown with the University of Missouri says while the ag economy is struggling – it isn’t the same dire situation of the 1980’s.  “Yes – calf prices for my Missouri producers were $3-per-pound-plus in 2015 are now sitting more like $1.50-per-pound,” he says.  “So they’ve fallen half – but, that’s a far cry from where they were in 2008.”

And Brown says, there are still farmers – who lived through the farm crisis of the 1980’s still looking to make land purchases.