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Farmageddon Is Real And Farmers Are Suffering
Farmageddon Is Real And Farmers Are Suffering
Farmageddon is real and very painful for a small segment of America. According to the Book of Revelation in the New Testament of the Bible, Armageddon is the prophesied location of a gathering of armies for a battle during the end times. Today many farmers living in America’s farm belt are facing tough times with no end in sight. The trade war with China has taken a toll by bringing grain exports to a near halt. This has caused grain prices to tumble adding to the list of blows hitting farmers. While the number of people employed on farms has declined over the decades farming remains a big business and has a huge impact on many communities. In these areas, themoney flowing into local businesses as farmers sell their crops is evident in everything from truck sales to the little things common in everyday life such as dining out or getting a haircut.
While little noticed by the average person living on the coast or in one of our many large cities this is a big deal. As mentioned earlier in this article farm income is not contained in a closed-loop but spills into other parts of the economy. Many areas in the heartland of America have not experienced the benefits showered upon Wall Street, because of this we should not be surprised if the gloom covering many areas of the country does not lift anytime soon. The chart to the right shows a “forecast of income” but fails to take the impact of the trade war into full consideration.
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Farmageddon: Farm Loan Delinquencies And Bankruptcies Soar, Incomes Plunge
Farmageddon: Farm Loan Delinquencies And Bankruptcies Soar, Incomes Plunge
Following years of depressed farm income and rising debt levels, a review of the Federal Deposit Insurance Corporation (FDIC) quarterly report by Tri-State Livestock News reveals that “delinquency rates for commercial agricultural loans in both the real estate and non-real estate lending sectors are at a six-year high.”
About 2.5% of commercial real estate loans in agriculture were 30 days past due in 1Q19, up from 2.1% in the prior quarter and above the historical average of 2.1%. 2.3% of non-real estate loans in agriculture held by commercial lenders were 30 days past due, up from 1.5% in the previous quarter and above the historical average of 1.7%. Delinquency rates for commercial lenders haven’t been this high since 2013.
Delinquency rates of agriculture loans aren’t at crisis levels yet but have trended above historical averages in the last several years as farm incomes in the Midwest and Mid-Southern states have collapsed over the previous six years.
Net farm income, a broad measure of profits, has fallen 45% since a high of $123.4 billion in 2013 to about $63 billion last year, according to the US Department of Agriculture (USDA).
Farm incomes are expected to be significantly lower in 2019 as record floods devastated large parts of the Farm Belt this year.
About two-thirds of agriculture banks surveyed by the St. Louis Fed said their farm clients were severely affected by the flooding and other adverse weather conditions through summer.
Farm incomes in several regions of the Midwest have become stable this year thanks to President Trump’s farm bailout(s) and elevated corn prices that started in May due to yield concerns following wet weather, according to bankers surveyed by the Kansas City Fed.
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Here Are The Signs The US Gov’t Is Preparing For Farmageddon
Here Are The Signs The US Gov’t Is Preparing For Farmageddon
President Trump on Tuesday morning hinted at what appears to be yet another farm bailout (the third one must be the charm), as farm bankruptcies soar and agricultural debt loads become unbearable.
As they have learned in the last two years, our great American Farmers know that China will not be able to hurt them in that their President has stood with them and done what no other president would do – And I’ll do it again next year if necessary!
A farm crisis on par to what was observed in the early 1980s could be coming, especially since the US Senate passed a bill late last week that makes it more accessible for farmers with larger debt loads to file for bankruptcy protection, reported Reuters.
The bipartisan bill, designated as the Family Farmer Relief Act of 2019, increases the total debt load of how much a farmer can have to meet the qualifications to file Chapter 12 bankruptcy, to $10 million from the prior $4 million ceiling.
According to the US Department of Agriculture (USDA) data, operating a farm today involves much higher costs than it did three decades ago. Experts say without a complete reform of the law, mom-and-pop farmers would be subjected to Chapter 11 bankruptcy protection, which is expensive and chaotic.
The bill was passed last Thursday and earlier by the US House of Representatives, is headed for President Trump’s desk to sign. Judging by the president’s comments on Tuesday morning about the potential of a third farm bailout, it seems that this bill will most likely get passed.
Republicans and the Trump administration are preparing for Farmageddon with new interventionist measures that will hopefully cushion farmers from retaliatory tariffs by China.
The new bill once signed, will support President Trump’s farm base that has been walloped by retaliatory tariffs by China on agriculture products.
