An unsettled economy, in combination with other factors, have more than doubled the amount of money at risk for U.S. farmers, a University of Illinois agricultural economist says.
“Last year, both production costs and commodity prices doubled and then plunged,” Nick Paulson says. “Despite the recent decline, both prices and input costs are still well above their long-term averages for corn, soybeans and wheat.”
According to Paulson, this means farmers “have twice as much money at risk due to higher volatility in the market.” An additional problem facing growers, he says, is that government programs that once provided a safety net have been undermined by market volatility.
“These programs are based on price levels that are now basically irrelevant,” Paulson says. “Programs no longer guarantee breakeven prices or even prices close to breakeven for producers.”
It will become increasingly important in this volatile environment, he notes, to lock in input costs when they are favorable.
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