02-03-2013 06:15 PM
Well I have spent the day reading articles and watching interviews about the farm economy, and the debt to asset of the farming community. I honestly don't think everything is as rosey as some think. I'm sure most of us on this site are a little better then others. Why is that? I don't know. I just have that feeling from the things I have read on here. Well what I have concluded is that farming I believe is alot more capital intense that what it was a generation ago. I am 35 years old and just remember the worried looks, the whispers among my parents and going to farm sale after farm sale. Cash rents and machinary purchases are the things are really big this time around. At least around here there wasn't much ground rented for cash in the 70's. For what I have seen cash rents for it is rediculous. I'm not for sure what some land owners think but I guess as long as they get their money who gives a **bleep** right? I know the new lease have full payment by 1st of March. Another thing that has to be looked at interest rates are super low. back in the late 70's interest rates were around or above 10% today they are around half of that. The high was around 20% in the early 80's. What happens if interest rates go from 4-5% today to 8-10%. I don't look for interest rates to raise immediately but in the next 5-7 years they sure could. Last but no least the world has alot more farmers today then they did then. When I mean farmers, I mean farmers that raise a surplus to sell to other outlets.
long story short, make sure all your I's are dotted and T's are crossed because it might get ugly.