Northern Ag Network
Northern Ag Network
Northern Broadcasting System    Northern News Network    Northern Sports Network
Search This Site...
Search This Site...

Featured Stories

1980’s Economic Downturn Unlikely

7/14/2017 3:03:00 PM/Categories: Popular Posts, Today's Top 5, People in Ag, Livestock, Grains, National News, International

At its monthly meeting today, the Farm Credit Administration board received a report from the agency's chief economist on the similarities and differences between the farm crisis of the 1980s and the current economic downturn in the farm economy. 

According to Chief Economist Stephen Gabriel, many observers are asking if the current downturn is a prelude to a 1980s-style crisis. "The likelihood of this is very low," he said. "A confluence of adverse factors led to the crisis that occurred in the 1980s. It would take a similar combination of adverse developments to precipitate another crisis in the farm economy."

These two periods are indeed similar in some respects, said Gabriel. Both downturns were preceded by a "demand shock" that pushed up grain and soybean prices and, consequently, farm incomes. In each case, farmland values and farm debt rose quickly before the downturn. And in each case, grain prices and farm incomes fell sharply after the downturn. But there are also some important differences, said Gabriel. 

"Interest rates were very high in the 1980s, exacerbating the debt burden of many farmers. Today's interest rates are historically low. And though short-term rates are rising, they are likely to rise slowly," he said. 

The price of oil is another major difference, according to his report. In 1979 and 1980, the price surged, while today it is declining. Also, the general economy is in better shape today than it was in the 1980s. The country experienced two recessions during the 1980s' crisis whereas today we're in an "extended, if lackluster, economic expansion," Gabriel said. 

Finally, real estate mortgage underwriting appears to have been "far more conservative during the most recent run-up in farmland prices" than it was during the 1980s. 

"Nevertheless, conditions in the agricultural economy could deteriorate further if grain and soybean prices remain at low levels, or if interest rates rise quicker than expected," said Gabriel. Economic shocks, such as disruptions in international trade, could also weaken the agricultural economy. 

"Fortunately, the Farm Credit System is well positioned to manage additional stress," he concluded. The System is well capitalized, and its credit quality is good. What's more, the Farm Credit Administration, which regulates the System, now has enforcement authorities it did not have during the crisis of the 1980s. 

Notational Votes
Since the June FCA board meeting, the following notational votes have occurred. Notational votes are actions taken by the FCA board between board meetings. 

• On June 15, the board granted preliminary approval of the proposed plan of merger of Farm Credit Ness City, FLCA, with and into Farm Credit of High Plains, FLCA, a wholly owned subsidiary of High Plains Farm Credit, ACA. The board's approval is subject to certain conditions. If all conditions for final approval are met, the merger is scheduled to take effect Oct. 1, 2017. 

• On June 21, the board approved a request from the Federal Agricultural Mortgage Corporation to invest up to $250 million in Rural Enterprise Bonds secured by pools of loans. 

• On June 28, the board authorized the agency's chief financial officer to reallocate funds in the Office of Information Technology's budget. 

• On June 29, the board approved CoBank's request to invest up to $2.8 million in bonds issued by an assisted living and hospice care facility that is a subsidiary of a rural hospital in Colorado. FCA placed conditions on CoBank in conjunction with this investment.

Picture: Pixabay

Farm Credit Administration 

 
Print
Tags:

Leave a comment

Name:
Email:
Comment:
CAPTCHA image
Enter the code shown above in the box below
Add comment

Name:
Email:
Subject:
Message:
x

Recent Ag News

Livestock Transportation Rules Delayed

11/20/2017 1:19:00 PM
The Electronic Logging Device (ELD) enforcement deadline for agricultural haulers is delayed by 90 days! >> Read More
Article rating: No rating

Another Case of Tuberculosis Discovered in South Dakota

11/20/2017 6:06:00 AM
Bovine tuberculosis (TB) has been confirmed in a South Dakota beef herd. >> Read More
Article rating: No rating

United States Cattle on Feed Up 6 Percent

11/19/2017 11:00:00 AM
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.3 million head on November 1, 2017. The inventory was 6 percent above November 1, 2016. >> Read More
Article rating: No rating

Tax Expert Offers Pro's and Con's of New Tax Legislation

11/17/2017 5:14:00 AM
The House of Representatives on Thursday voted to approve a nearly $1.5 trillion tax overhaul bill. The bill passed with a 227-to-205 vote. Farm groups offered a mixed reaction to House passage of a tax reform package. >> Read More
Article rating: No rating

An Open Letter to Buyers, Producers, Reps and Brokers about the ELD Mandate

11/16/2017 4:49:00 PM
Over the last 5 years the transportation world has lobbied and protested a mandate that will turn the world as we know it upside down.  >> Read More
Article rating: 4.0
RSS

Find Articles by Date

«November 2017»
MonTueWedThuFriSatSun
2345
69101112
171819
20212223242526
27282930123
45678910