News

Credit organizations preparing for more red

The head of a Midwestern Farm Credit organizations says he’s preparing for another year of negative margins.

“Shallow, negative loses, but over a long period of time, is really taking a severe toll and it’s like nothing I’ve ever experienced.”       

GreenStone Farm Credit Services CEO Dave Armstrong tells Brownfield they expect producers in 2019 to continue to lose equity and working capital for the fourth year.

“We’re extending payments in some cases, we’re putting some operations on interest only and foregoing some principle repayment.  In some dairy accounts, we’re going on three or four years in some cases of interest only.”     

In 2018, interest rates rose by one percent which CoBank’s Tanner Ehmke tells Brownfield made up a significant portion of rising costs for farmers.

“Interest expense last year, according to USDA, increased 21 percent year over year, that is a huge increase.  Now interest expense isn’t the biggest line item on the balance sheet, but it’s pretty big.”          

Tanner is encouraging producers to find ways to limit expenses and identifies labor, trucking and inputs as areas to examine.

AUDIO: Brownfield interview with Dave Armstrong

AUDIO: Brownfield interview with Tanner Ehmke