News
Of Intere$t
by Tony English
Chief Financial Officer
This one is different. We now have officially been in recession since December 2007. This downturn is certain to be longer than most. The severity has also been enhanced by the fact that all of the world’s major economies are in a synchronized recession at the same time. That is not typical. What is also different is that we are witnessing a redefining of the financial industry as a whole. The amount of government intervention and wealth destruction that has occurred will shape how we obtain credit for generations to come.
The agricultural industry has not escaped unscathed. All of agriculture has seen significant volatility in commodity prices, input expenses and interest rates. Specific sectors have experienced significant stress to include the protein industry, dairy, nursery and bio-fuels. All of the volatility and stress has emphasized that American agricultural producers cannot just deliver the best product to market; they must also be able to manage a wide range of technical expertise such as production management, marketing, financial, legal and environmental issues. Having a team of experts on your side is more important than ever. Producers that are able to manage risk appropriately will have a strategic advantage as we go forward.
On the macroeconomic front, the Federal Reserve will continue to take steps to prevent deflation while keeping an eye out for brisk inflation once the economy as a whole starts to improve. Economic data as well as the market’s reaction to political solutions will be watched closely. The value of the dollar, which has been a safe-haven during this time of turmoil as well as real interest rates, will have significant influence on the price of oil and other commodities to include agricultural commodities. Supply and demand will shape the long term movement of commodities with short to intermediate periods where commodities are inversely related to the value of the dollar.
At Frontier Farm Credit, we want to earn your business as a full financial service provider. We have a wide range of financial products available including variable, adjustable and fixed rate loans, insurance products, tax and record keeping as well as business services consulting to help you position your operation where it needs to be in these volatile times. Please contact your Financial Services Officer with questions about any of these product offerings.
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