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by Tony English on November 18, 2011
Harvest is finishing up after some pretty tough growing conditions in much of eastern Kansas. Economic conditions also continue to be pretty tough. Unemployment remains high and economic growth is precarious at best. The difference between slow growth and an actual double-dip recession is probably very small. There is still a contagion threat from Europe and a worldwide economic slowdown looms over any recovery here in the United States. Politics will rule the day as the election cycle begins in earnest. Political maneuvering will affect not only economic policy for the near future but also government programs. The next Farm Bill debate will not only have a record number of stakeholders at the negotiating table, but also will be shaped by the shadow of record government deficits.
When it comes to government spending and support for farm programs, it is simply a case of “too many ticks and not enough dog”. The pain of working our way out of the national debt will be felt in every segment of our society and across all economic industries. As always, uncertainty in the economic and political environment will add volatility to the agricultural industry for producers. Risk management is a skill that producers will be required to utilize while employing the tools that are available.
At the time of this writing, the equities markets seem to be straddling the fence between the belief that a recovery must be on its way versus the realization that there are numerous issues that must be addressed before any real progress can be made with this economy. Commodity markets will continue to be influenced by the value of the dollar as well as macro supply and demand forces. Bond prices and interest rates are being shaped by a Federal Reserve policy that includes extending the duration of its investment portfolio in an attempt to “twist” the yield curve to bring longer-term rates down. There appear to be few additional tactics that the Fed can use in their commitment to provide low rates and liquidity for the markets.
At Frontier Farm Credit we offer a team of experts in the areas of financing, insurance, record keeping and tax preparation. Farm Credit is your full financial service provider in these turbulent and uncertain times.
877.744.7144 | Copyright © 2012 — Frontier Farm Credit
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