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2016 Logan County Farm Outlook Magazine
Lincoln Daily
News.comMarch 24, 2016 9
Because the dollar is strong, according to a podcast
delivered by Logan County farmer Bill Graff on
February 8th, U.S. currency is a commodity and
foreign countries are in a crunch because they
don’t have the dollar, and they need it to rebuild
their economies.
Graff said that the reason they are missing dollars
is because the U.S. has become less dependent
on foreign oil. He noted that as the U.S. works
to provide its own energy resources, it is buying
less oil from foreign countries, deflating the value
of the product, and also creating a cash crunch in
those countries, that is ultimately having a circular
effect and impacting the U.S. in a negative way.
So, is the answer that the U.S. should back off on
its fuel production? Some are afraid that it could
go that direction, especially with ethanol. If oil
is cheap, and foreign trade needs our dollars to
rebuild their economies, will the U.S. back off on
the production of grain fuels? And if that happens,
what will be the impact on Logan County farmers?
More grain with less marketing options equates
to higher supply and lower prices, and here we go
again.
Low yields and low prices make farmers a high
risk
In Graff’s podcast number 120 – “Farm Finances,
it’s ugly out there” posted at the end of December,
he noted that it is a fact that 70 to 80 percent of
Illinois farmers lost money in 2015 based on their
accrual accounting.
In that accounting process, those farmers looked
not only at the decrease in yields and dollars per
bushel but also at the deflation of their longer term
assets. Grain in the bin was worth less in October
of 2015 than in October of 2014. Those who were
holding on to older crop as their rainy day umbrella
were seeing holes punched in the canvas, and the
profits were running out like water.
With 2015 being less than a break-even year on a
cash basis, fewer investments were made in farm
machinery. That equated to older equipment on
the asset sheet, and again a decrease in value, and a
decrease in net worth.
Land prices are also falling. According to Graff’s
podcast, the year of $14,000 per acre land has
passed, and in 2015 land prices fell by about 7
percent. Land is often considered to be the wealth
of the farm, but if the value is depleting, then so is
the wealth.
In January of this year, United States Congressman
Darin LaHood held a roundtable discussion in
Logan County, calling together farmers and
agricultural suppliers throughout his district to
create an agriculture advisory committee of his
constituents.
In that meeting, there were several who expressed
concern over the economy, and one attendee noted
that the Central Illinois farmer is going to be
considered a high risk in the banking industry this
year. He noted that the bank may go along with
financing operating costs for one more year, but if
the downward spiral
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