Farm Financial Conditions: Is it the 80’s All Over Again?

Ag Economic Insights

By David Widmar and Brent Gloy

One of the most common questions we have been hearing on our speaking trips goes something like this:  “So is this just a replay of the 1970’s farm boom and subsequent bust in the 1980’s?”   While nobody can say for sure, we feel fairly confident in saying that while today’s farm financial conditions clearly have some similarities to the 1980’s it is also quite different in many respects.  That does not mean that this downturn won’t end poorly, just that several of the drivers and factors that led to the previous boom and bust are quite different than those at play today. Continue reading

Inflation: One Big Difference Between Today and the 70’s and 80’s

Inflation

by Brent Gloy

As the farm sector lurches through a painful economic slowdown, many are leery of another farm financial crisis. While a full discussion of the differences and similarities of these periods would require a significant amount of discussion and analysis, we thought that it would be useful to examine one key area in which the current situation differs significantly from the 1970’s farm boom and 1980’s bust. Continue reading

Clues From Crop Insurance Price Discovery

cornsoybean

by Brent Gloy

Planting intentions for 2016 will draw considerable attention in the coming months. Crop insurance guarantees are one factor which will play into this decision. As we pointed out last year, crop insurance guarantees have fallen considerably in the past two years and barring a rally, guarantee prices are likely to be lower again this year.

At current levels, crop insurance will not guarantee revenue sufficient to cover variable costs plus land rents. The relative levels of corn and soybean prices are similar to last year and do not appear to suggest a large shift in acres from last year. Continue reading