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Farmers’ working capital at “critical low”

The working capital of U.S. farmers is very low, according to the USDA Economic Research Service. Brent Gloy with Agricultural Economic Insights says he was surprised by the low number which is $38-Billion dollars for 2019. Although the report did not take into account the recent rise in commodity prices or the upcoming trade mitigation payments, Gloy says the drop in working capital is still a major concern, “I think it’s a pretty strong indication of how bad the economics of farming – not just in corn and soybean farming but across ALL the sectors of the ag economy – have been the last four years.”

He encourages farmers to stay cautious, “If you get the chance to rebuild you should do that just in case we don’t have a trade deal. Because if we don’t have a trade deal it’s going to take another year of bad weather next year to keep commodity prices high.”

Gloy says the ongoing China trade war has made financial problems in the farm sector worse and resuming trade with China would have a much greater impact than any weather-driven price increases or MFP payments.