Early Signs of Farm Fixed Expenses Falling

4618668856_9ddf2b5be0_m by David A. Widmar

As we’ve pointed out in previous posts (most notably here), a return to profitability for producers in light of lower commodity prices will require a combination of three scenarios: 1) variable costs moderate through eventual reduction in farmer demand for inputs 2) fixed costs decline through reduction in fixed asset demand and values, and/or 3) output prices may improve. About a year ago we noted that fixed expenses were still increasing, but at much slower rate. This week we take an updated look at fixed expenses to evaluate if producers have adjusted their cost structure lower. Continue reading