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BA Deere
Honored Advisor

Ernie`s Rural Mainstreet Index

It`s been said this spring that ag bankers have been lonely Maytag repairmen, but apparently their business picked up in May. 

Snip:

The May loan volume index soared to 73.0 from April's 51,9. “Escalating costs of farm inputs pushed borrowing up to its highest reading since May 2020,” said Goss.

https://www.creighton.edu/economicoutlook/mainstreeteconomy/  

A farmer/seed dealer said interest on his note already went up 0.5%.   I think farmers booked inputs and drug feet before visiting the banker.  Seed companies have eye wash rates and terms on their financing and coops also got in the input finance game ... no groveling required, however when it`s due you better have the dough, I doubt that some heartless corporation in Denver has the same sympathy of the local rural banker.

14 Replies
rsbs
Senior Advisor

Re: Ernie`s Rural Mainstreet Index

I am old enough to have watched one era's "young tigers" borrow and buy things that they could not pay for, have their debts reduced below what anyone else would pay to buy them out (by government decree), and have no doubts that there will be "debt assistance" coming for the current group.

I see guys with millions of dollars of debt, with no cushions, that will not survive high interest and lower commodity prices. Yet, they probably will.

That's the new normal.

Buy it, and the help will come.

sdholloway56
Senior Advisor

Re: Ernie`s Rural Mainstreet Index

I doubt that this year will equal last year’s record NFI but it is lining up to be good.

Unlike only a few years ago when the dang gubmint had to make up 1/3rd of a considerably smaller number..

The monopoly corps love it when their farmer cows get fed well because it means a gusher of milk is coming (without a free market, they just raise prices).

 

k-289
Senior Advisor

Re: Ernie`s Rural Mainstreet Index

Ernie  G.  has  Monday  Morning  1/4  Back  down  to  a  T . ,  with  30  DAZE  after  the  blizzard  forecasting  -  expertiZm  gala ,  I've  HERD  expressed  =  =  = 

 

0 Kudos
BA Deere
Honored Advisor

Re: Ernie`s Rural Mainstreet Index

During the 80`s farm "crisis" there were many "gazelles" for the lion to cull, today everybody (except me) has a $300,000 planter pulled by a $300,000 tractor on $18,000/acre newly pattern tiled land ... so, I don`t know.  They have to have crazy good cashflow , a lot of equity.  All that what I`d call unnecessary "luxury" if there`s even a small debt, it could bite if rates go where they should .... above inflation. 

It`s like the baby formula companies, farming is essential, yet if rising interest rates caused a big chunk who "plant straight" to get sold out, that would leave big hole in food production.  Not to pick on Laura, but to most of urban and suburban America, I`m afraid their impression of farmers are super models driving machinery worth more than their home.   If it would get to another debt write off, it`d have to be a narrow vote taken by those in safe districts in the middle of the night.

BADeere_1-1653065285278.jpeg

 

 

 

0 Kudos
clayton58
Veteran Advisor

Re: Ernie`s Rural Mainstreet Index

BA. I gotta ask, is that the operator for the $600,000 tractor and planter combo?  And she’s another $300,000?  Looks like a million dollar smile. I’m afraid it would not fit in my shed, but might be nice to try 

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Blacksandfarmer
Senior Advisor

Re: Ernie`s Rural Mainstreet Index

I've got a feeling this bubble is going to burst soon. Honestly, I thought it would have happened already, but since I got very little covid money it's almost hard for me to completely grasp the true amount of money out there that has bloated our economy. The government has to do something, but I'm afraid the damage from raising interest rates will be particularly rough to farmers (who depend on yearly operating loans) and first time home buyers (that never received covid checks) in the not so distant future. 

 

BA Deere
Honored Advisor

Re: Ernie`s Rural Mainstreet Index

0 Kudos
sdholloway56
Senior Advisor

Re: Ernie`s Rural Mainstreet Index

I have no right to complain since I was advocating here for very strong fiscal and monetary intervention very early in the pandemic.

Most were in denial bout the severity and global impact and remain so today.

But anyway, Powell’s H Bomb almost got Trump re-elected, folks with assets got huge opportunities to cash in and the bottom quintile is in the best shape it’s been in decades, on average.

But sure, a lot of turbulence to be expected in the wake of a fleet of aircraft carriers passing by.

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Blacksandfarmer
Senior Advisor

Re: Ernie`s Rural Mainstreet Index

SD, inflating the largest economy on the planet with "free" money has created a chain reaction across the globe. Imagine living in a country that depends on American goods but you never got the handout from Uncle Sam. Between the U.S government inflating the global economy, and war in Ukraine, there will be some real pain felt across the world.