Despite a strengthening U.S. economy, the agricultural sector has been mired in a prolonged downturn alongside persistently low commodity prices and elevated input costs. Financial stress has continued to build for some producers amid the stagnation and profit opportunities have remained limited.
“What you typically expect in any cycle is that when profits are limited it means more producers need more financing,” says Nathan Kauffman, vice president and Omaha Branch executive with the Federal Reserve Bank of Kansas City and the Kansas City Fed’s principle expert in agricultural economics. “There may be producers that did not previously need financing that now need it, and those producers who already needed the financing need more of it. And that’s been happening during the course of this 5 year downturn in agriculture.”
Kauffman tackled this topic and more in the recent Ag Equipment Intelligence webinar, “Stuck in Neutral: The Federal Reserve Bank’s Outlook for Agriculture. The webinar can be viewed in its entirety here.