This article first appeared on LancasterFarming.com as part of a new series, “Farm Credit Corner” which will print the second Saturday of each month. You’ll get insight from both MidAtlantic Farm Credit’s President and CEO, Tom Truitt, and Darrell Curtis, President and CEO of AgChoice Farm Credit. Be sure to look for it in your print copy!
For many of us, this is the time of year when we start to reflect on the past twelve months of business and plan ahead for another year. Agriculture, like most other industries, is impacted by a variety of unpredictable conditions. Because of this, we in the farming community tend to be more cautious with our money, rather than bold. We’re here for the long term, and our stability is a key part of that.
Part of planning for success is being aware of trends that are forming. Based on the current economic conditions, we can make the following predictions, which are what we took into consideration as we worked on our own business plan for 2017.
Prediction #1: Stressful dairy and cash grain sectors, and slow poultry expansion. We’ve been experiencing these already, and they will continue in 2017. As a result, we are advising all of our grain, dairy, and poultry customers to work with their financial specialists to review all options and position themselves properly.
Prediction #2: Lower net farm income. Even though other market sectors remain steady, the cost of production will increase as a result of the rising fuel costs. It is unlikely that we will see the low fuel costs we experienced earlier in 2016.
Prediction #3: Increasing interest rates. They’ve been gradually increasing over the past few months, and will continue to do so in 2017. You know that big project you’ve been saving for? Now is the time to put those plans into motion.
Prediction #4: A steady real estate market. If you’re a first-time homebuyer, or looking to make a move, this is a great sign. With rates going up, this is a good time to purchase.
Prediction #5: Fewer equipment purchases. With net farm income decreasing, this is one way to help keep overall costs down. This, along with the fact that many farmers have late-model equipment, will keep the industry flat. If you are looking to update, this is a good time to purchase new equipment, as dealers will likely be running some special sales.
We don’t know yet how the 2016 presidential election will impact agriculture, but we do know that the current global economy is fairly weak, which is hurting agricultural exports. The national and regional economies, as well as the country’s unemployment rate, are all holding steady, which is a good sign as we move into 2017.
If you have any questions about your business plan or what these trends mean for you and your operation, please call your local Farm Credit office. We’re happy to talk with you and help you plan for what lies ahead.
Wishing you and your family a happy holiday season,
CEO, MidAtlantic Farm Credit