Glory days fade for U.S. farmers

WSJ reports the Farm Belt, one of the hottest parts of the U.S. economy in recent years, is rapidly cooling. The Midwest faces plunging crop prices and stubbornly high production costs. Corn prices have dropped from $7.54 a bushel around July Fourth in central Iowa to just $3.81 a bushel on Tuesday. But growers are hearing from suppliers that fertilizer and seed costs could rise by more than 40% each for next spring's plantings.

Some farmers are postponing equipment purchases and considering whether to plant less of such high-cost crops as corn come spring.

Stock prices of agricultural companies have plummeted. Many Midwest farmers worry that the combination of lower crop prices and high costs will usher to an end, by next year, one of the most flush periods in American farm history.

Farmers fear a big drop in next year's profits. Most economists figure the Farm Belt can weather a slowdown, partly because farmer balance sheets are strong, and partly because federal mandates will increase the amount of corn consumed to make ethanol fuel next year. Also, economists think global demand for U.S. crops will remain robust despite recent economic troubles.

Still, U.S. growers clearly face a riskier, more volatile environment in which to make bets on what to grow and how much. (Stocks mentioned: BG, ADM)

Posted: 10/22/2008 8:34:41 AM by Global Administrator | with 0 comments

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Glory days fade for U.S. farmers

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