With the current farm bill expiring in 2023, rising inflation and the global supply chain issues the agriculture industry is facing, are we nearing a farm crisis like we or perhaps another “too big to fail” scenario as we saw in 2008? Whether another crisis is coming or not, farmers are facing obstacles that lenders can help them overcome.
Farmers are struggling to keep pace with inflation. Production costs for seed, fertilizer, equipment and other farming essentials are the highest we’ve seen in decades, subjecting farmers to higher cost of capital required to operate their business. In fact, higher input costs were identified by as the biggest concern their farming operations currently face. As an example, fertilizer cost $510 per ton just last year. Fertilizer is up to —almost triple. Many farmers are now expecting next year to be even worse.
Take this cautionary environment and add to the prior year’s historically high commodity prices and generous government payments, and many growers flush with cash were investing that capital in expanding their operations with new land acquisition. In turn, this has driven up land prices.