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Are You Optimistic?

Amanda Huber, Editor

Amanda Huber, Editor

What goes up, must come down. There’s no two ways about it, and what is coming down now and has been for a while, is farm income. For the fifth quarter in a row, farm income has declined, according to a recently published survey by the Federal Reserve Bank in St. Louis of agricultural banks, some of which were located in the Mid-South.

In 2015, some crops were drowned out, and some acres were never planted at all. The result will be a reliance on crop insurance and a scaling back of spending.

“The lower projected farm income will likely reduce loan demand for capital expenditures for both machinery and farmland,” said one Missouri lender about the expected continuing decline in the last quarter this year.

But ag lenders work with farmers, and farmers are an optimistic bunch, even in the face of daunting challenges. No doubt some of that optimism has rubbed off on lenders because 50 percent of them reported being optimistic about the ag sector over the next five to 10 years, with 35 percent being neutral.

Said one banker, “I am optimistic because I do not think this downturn will be as severe as the 1980s.”

Well, let’s hope not. For now, ag lenders commend producers for having worked to increase their net worth and for following good business practices. If there’s one thing producers know how to do, it’s tighten that money belt.