Study: Farmers are being cautious with cash over fears about 2015
August 21st, 2014 by Ric Hanson
A survey of Midwestern agricultural lenders conducted by the Federal Reserve Bank finds plenty of wary farmers across Iowa and the region. Nathan Kauffman, with the Omaha branch office of the Fed’s seven-state 10th District, says not too many farmers and livestock producers are worried about this year, but 2015 is another matter. “Thinking about 2014, the crop insurance price for corn, for example, was set at $4.62 which is quite a bit higher than where cash prices are right now,” Kauffman says. “Going into early next year, February will be another important month, just thinking about what the crop insurance price might be set going into next year.”
Kauffman says most rural bankers reported solid credit conditions, but also say farmers are being very cautious about making equipment purchases or other capital outlays. “The important thing to note for now is that it looks like credit quality is still strong,” Kauffman says. “Repayment rates, though they’ve softened a bit, are still relatively strong, although that does present some concerns going forward.”
Analysts say this cautious approach by farmers will cause an economic ripple effect that will be felt by businesses throughout Iowa and across the region.