News
Of Intere$t
by Tony English
Chief Financial Officer
While we may be slowly working our way out of the global recession here in the second half of 2009, it just won’t feel like it in many areas of the economy. Productivity is up, balance sheets are being de-levered, and we continue to work our way through excesses in areas like housing. The job markets, however, are tough, and will continue to be so as consumers are more cautious and confidence is still precarious. An increase in government regulation and oversight and intervention into the markets will also mute some of the economic recovery, at least here in the United States.
The dollar is likely past its “flight-to-quality” phase and looks to continue the long-term downward movement versus other major currencies. With real interest rates relatively low, and huge amounts of liquidity as well as debt as a drag on the dollar, many prognosticators are indicating a weaker dollar and perhaps accelerating inflation in 2010. An increase in inflation with a weaker dollar would likely mean increased input costs for agricultural producers partially offset by firmer commodity prices.
Volatility has the potential to be significant and business risk management will still be a very important component for agricultural producers to consider. We know from recent history that markets can disconnect and move very rapidly. Additionally, there is always the potential for “shocks” to the markets such as H1N1 and the geo-political risk that is a constant in today’s world.
American agriculture has proven that it is the most productive and innovative in the world. To fully leverage that productive advantage, farmers and ranchers must also bring a working knowledge of risk management to many areas of their operation to include production, legal, marketing, operational and financial risk management.
Frontier Farm Credit wishes to earn your business as your full financial service provider and can bring a host of experts to the table to help you navigate during these interesting times. Not only do we offer a full host of competitive loan products to include variable, adjustable and fixed rate loans, but also a whole suite of related products and services. Please contact your FSO with any questions you may have about insurance, record keeping, estate planning, appraisals and tax preparation.
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