Texas Agriculture December 2, 2016 : Page 18

&KDOOHQJLQJÀQDQFLDOWLPHV IRUQDWLRQ·VIDUPHUV&#0f;UDQFKHUV By Tom Nicolette Senior Radio Reporter A tough year has come and almost gone. And another difficult year is ahead for farmers and ranchers. Farm income is in the longest slump since 1977. Just four years ago, record U.S. crops and farmland values were boosting purchases of land and equipment—a far cry from where the economy stands today. Bloomberg reports the level of debt to income is the highest in three de-cades, and farmers are increasingly unable to make loan payments. Mark Jensen, chief risk officer with Farm Credit Services of America and Frontier Farm Credit, refers to the current state of the agricultural econ-omy as an adjustment to the tailwinds of the economy of 2009-2013. “Most of those factors, as they re-late to world supply, world demand, the value of the dollar and the growth seen in the ethanol industry for sever-al years, have reversed. What you see going on is really a reset in terms of commodity prices, profitability in the industry, asset values,” Jensen said in an interview with the Texas Farm Bu-reau Radio Network. “It’s pretty typi-cal of what is seen in a cycle. We’ve seen these before and we are clearly in the midst of that right now.” The Federal Reserve reports the number of bankers requesting addi-tional collateral is the highest in 25 years. Government data shows farm income down 42 percent from a record in 2013. D ECEMBER 2 , 2016 AUSTIN BOBCAT OF AUSTIN 512-251-3415 bobcatcce.com SAN ANTONIO BOBCAT OF SAN ANTONIO 210-337-6136 bobcatcce.com DURABILITY REDEFINED. ALICE EDGARS FARM EQUIP. & SERVICE 361-664-5022 361-227-0916 STAR MOORE'S SERVICE CENTER 325-948-3595 It's hard to believe you can take the best loader in the industry and make it better. But that's exactly what Bobcat has done. Our loaders offer more cab space, improved visibility, increased fuel capacity and more. It's increased comfort and performance all across the board. Bobcat ® and the Bobcat logo are trademarks of Bobcat Company. Introducing Vermeer N-series balers – the newest models in the fl agship line from the company that started it all. Heavy-duty components provide superior strength and durability. Smart features like the available automatic pickup clutch and auto lube system further extend machine life. Plus, they’re backed by the best distribution network in the industry. Vermeer 604N/605N balers are here to stay. 18

Challenging Financial Times for Nation's Farmers, Ranchers

Tom Nicolette

A tough year has come and almost gone. And another difficult year is ahead for farmers and ranchers.

Farm income is in the longest slump since 1977. Just four years ago, record U.S. crops and farmland values were boosting purchases of land and equipment—a far cry from where the economy stands today.

Bloomberg reports the level of debt to income is the highest in three decades, and farmers are increasingly unable to make loan payments.

Mark Jensen, chief risk officer with Farm Credit Services of America and Frontier Farm Credit, refers to the current state of the agricultural economy as an adjustment to the tailwinds of the economy of 2009-2013.

“Most of those factors, as they relate to world supply, world demand, the value of the dollar and the growth seen in the ethanol industry for several years, have reversed. What you see going on is really a reset in terms of commodity prices, profitability in the industry, asset values,” Jensen said in an interview with the Texas Farm Bureau Radio Network. “It’s pretty typical of what is seen in a cycle. We’ve seen these before and we are clearly in the midst of that right now.”

The Federal Reserve reports the number of bankers requesting additional collateral is the highest in 25 years. Government data shows farm income down 42 percent from a record in 2013.

According to Bloomberg, a number of bankers are requesting additional collateral.

Dan Kowalski, director of research at CoBank, an agricultural lending cooperative based in Greenwood Village, Colo., said “unquestionably, some farmers are not going to make it. Bankers are asking if they have the cash flow to pay bills.”

Jensen expanded on farmers’ and ranchers’ cash flow challenges.

“Unlike the 1980s when that was a debt crisis, leverage crisis, what we see now is more a problem of cash flow,” Jensen said. “We went from such high extremes to lows so quickly. The best cure for high prices is high prices. The best cure for low is low.”

Jensen said they are looking at balance sheet structure and some of those assets borrowers bought a few years ago and paid with cash.

“We’re really working aggressively with customers on their cash flows where they can try to reduce some of those costs to get into a more viable position. Maybe there is an opportunity to refinance those, and spread out their cash flow to bring liquidity to the operation,” he said.

MetLife Agricultural Finance predicts farmland values will tumble 20 percent by 2018.

Read the full article at http://texasagriculture.texasfarmbureau.org/article/Challenging+Financial+Times+for+Nation%27s+Farmers%2C+Ranchers/2653526/363631/article.html.

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