An op-ed at Farm and Dairy, an Ohio ag journal, warns farmers that they can no longer afford to ignore the current economic reality and cites some grim numbers:
While the U.S. economy remains strong, with GDP growth estimated to average more than 2 percent over the next two years, real net farm income is down 28 percent, Johansson said, relative to the 10-year average.
In his statement to the U.S. House Committee on Agriculture Feb. 27, U.S. Secretary of Agriculture Sonny Perdue threw out these numbers: Net farm income has fallen nearly 50 percent from its peak in 2013.
And, as a result of low commodity prices, farmers are leveraging their equity — oftentimes their land — to finance operating expenses. Right now, the number of crop farms in a highly leveraged financial situation are about 1 in 10.
“Today, total debt is approaching record levels in real terms, and real estate debt has reached a record high in 2018,” Johansson said in his report at the forum.
Insane agricultural subsidy policies along with the huge growth in factory and corporate farms (which benefit yugely from the subsidies -- Forbes reported last year that the top 10 farm subsidy recipients in the U.S. each received an average of $18.2 million ) all share some of the blame. I live in Ohio's top dairy-producing county and the situation here is bad. In 2014 milk prices averaged $23.16 per 100 pounds. In 2018 the average was $14.43 -- a 38 percent drop. The reason? A huge glut in the dairy market -- to the point that some farmers have reduced the size of their herds to try and stabilize prices. One dairy producer up the road from me sold 3,000 head of cattle a few years back. While critics blame overproduction for prices bottoming out, producers point to a huge increase in dairy imports. It's not one or the other -- it's both. Low prices are good for consumers, but those chickens almost always end up coming home to roost -- usually in the form of scarcity and higher prices.