Agriculture Today - Golden Age Or Wishful Thinking?

Newspaper articles today describe a ‘golden age’ of American agriculture. While the rest of America deals with unemployment, a sluggish economy and debt, American farmers presumably are having the time of their lives.

An article in the Memphis Commercial Appeal said recently, “stories of prosperity are cropping up as U.S. farmers enjoy their best run in decades thanks to high prices for many crops, livestock and farmland and strong global demand for corn used in making ethanol.”

The article noted that farm profits “are expected to spike by 28 percent this year to $100 billion, and the amount of cash farms have available to pay bills also is expected to top $100 billion,” which is a first, according to USDA.

Of course, not everyone is sharing in the bounty. Heat, drought and flooding have prevented plantings, reduced yields and quality and hurt profitability for many farmers in the Mid-South and Southwest. Last week at the USA Rice Outlook Conference in Austin, we heard that rice acreage in Texas could be cut in half unless rivers that supply water to a three-county rice growing region reach an adequate level. We hear that this is not very likely.

Meanwhile, salt intrusion could threaten thousands of rice acres in southwest Louisiana next spring.

No doubt, farmers have been able to pay off debt, purchase new equipment and perhaps splurge on a nice vacation for their families. But many are cautious. “It was a successful year,” Illinois farmer Dale Hadden told a reporter for the article. “But most farmers would tell you that just because you’re flush with cash, you don’t spend it all.”

Indeed, behind the silver lining of the ‘golden age’ of agriculture is a record cost of production to go with the record income. Then there’s the obvious concern of what might happen if a so-called disruptive technology suddenly took away corn use for ethanol, or if the European economy collapsed, or if China’s remarkable economic growth were to suddenly flatten out. If commodity prices fell, would input costs follow them down?