Ag Strategic Management

April- June 2002

Kelvin Leibold , farm management field specialist

Problem

North Central Iowa has seen a drastic change in the structure of agriculture. Farmers and lenders are facing tremendous change. The 1996 Farm Bill has increased the challenge of trying to remain profitable. Most of the farm payments have been passed through to the landowners. At the same time we have seen a decrease in world grain and other commodity prices.

Response

ISU Extension provided information to 40 lenders and large producers at the ProAg Outlook meeting on the reasons for decreased world prices and the outlook for grain and livestock prices in the coming year. I shared what was happening in Brazil and what the potential is for additional grain, livestock and other commodities. Robert Wisner gave an overview of U.S. and world grain production. John Lawrence presented information on hog and cattle production. He also highlighted issues involving the packing industry and risks associated with packer plants operating at full capacity.

Impact

The lenders and producers gained an understanding of the current global grain and livestock production. They also realize that it is highly unlikely to see a sustained increase in crop prices in the foreseeable future. Global competition will also increase in the meat sector as well. This threatens the future growth of U.S. meat exports. The lenders also gained a better understanding of the importance of farm subsidies to the whole agriculture sector. The lenders will be able to take this information and work with thousands of clients as they assist them in making financing and strategic planning decisions in the future.

 

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