Iowa and national economists, along with ag marketing experts, are agreeing that many indicators are pointing towards a bursting of the ag sector profit bubble in the next two years. That's why the Iowa Farm Bureau Federation, the state's largest grassroots farm organization, is bringing some of the nation's leading experts in finance, marketing, policy and economics to Ames July 22-23, to help farmers plan how to weather the evolving economic times.
"We are going through many of the same cycles that our farmers saw in the 1970s land cycle, high commodity prices, skyrocketing land prices and strong trade markets. At this stage into the 70s land cycle, farmers were boosting capital expenditures by 80%. This time, we're only up about 40%, so we are being more conservative, but a turning point is coming and being aware can help you manage and anticipate what's likely to happen, avoiding the kind of devastation we saw nationwide in the 1980's Farm Crisis," says IFBF president Craig Hill.
Prior to the 1980s farm financial crisis, too many farmers ignored warning signs
He adds, "Back then, too many farmers ignored the signs of a bubble burst and it put them on the path to economic doom, from which many never recovered. This time around, there are new challenges; our production costs have doubled and now our weather seems to bring its own set of problems, from drought one year to excessive rainfall and flooding the next."~~~PAGE_BREAK_HERE~~~
IFBF economist Dave Miller agrees. "We're in the fourth or fifth year of robust earnings in the ag sector and we expect capital expenditures to remain relatively strong through the rest of this year. But, there's a persistency factor: farmers don't run out and spend because this year was good. They also don't quit spending just because one year was bad. I would suggest that the drought of 2012 was severe enough that farmers did cut back, but they may see it as just a 'blip.' In reality, it is the persistency and failure to recognize a general 'turn' in the ag sector that boosts debt levels to where it's unsustainable -- and we want to do what we can to prevent that from happening."
Looking at how farmers can prepare to meet challenges in today's agriculture
Helping Iowa farmers manage market risks like these and discussing farm policy challenges is the focus of the 2013 IFBF Economic Summit. It's titled "Grain, Gridlock and Globalization: Meeting the Economic Challenges in Today's Agriculture", and it will be held July 22 and 23 at the ISU Scheman Building on campus in Ames.
The two-day summit brings together nationally-known experts on crop and livestock market trends, exports and commodity price experts. Experts ranging from economists Allen Featherstone of Kansas State University, Michael Boehlje from Purdue, export and policy analyst Ross Korves and Ag Meteorologist Elwynn Taylor are among many nationally-recognized monetary, policy, trade and economic experts tapped for the July IFBF Economic Summit.
For a complete listing of the panelists and schedule, click here. The price of the two-day summit is $50 for Iowa Farm Bureau members and $150 for non-members. Information about the summit, lodging and online registration forms can be found at the Iowa Farm Bureau website.