U.S. Farmers Face Tough Choices as Debt and Trade Risks Grow
Arlan Suderman, StoneX Chief Commodities Economist, reflects on the pressures facing U.S. farmers today and how lessons from past crises can guide the path forward.
Key Takeaways
Past farm crises highlight the risks of inflation, debt and trade disruptions
Today’s farmers face high borrowing costs and uneven sector performance
Survival requires new marketing strategies and defensive decision making
Looking Back at Past Crises
Suderman outlined that the most severe farm crises in US history were the Great Depression of the 1930s and the downturn of the 1980s. “That was a very dark time in agriculture…farm failures were very high”. Inflation, rising land values and excessive borrowing left farmers vulnerable to a sudden collapse in prices and trade restrictions.
Comparisons With Today
While some individual farmers today are hurting as much as those in the 1980s, the sector as a whole is more stable. Suderman noted that livestock producers are supported by strong demand and high prices, while crop farmers in marginal regions are struggling. Farm loan delinquencies stand at around 1.9%, far below the levels seen in the 1980s crisis.
The Role of Trade and Global Shifts
Trade remains a key factor. Suderman pointed to the strain from losing China as a major buyer of US soybeans. “Soybean export demand may fall to the lowest level that we’ve seen in maybe 15 years, and that’s largely due to the loss of China”. By contrast, exports of corn and wheat remain relatively strong, underscoring the uneven impact across commodities.
Lessons for Farmers Today
Suderman emphasized that surviving today’s downturn requires a different mindset. “Farmers tend to market to trying to get the highest price…over the next year or two or three, we need to focus on base hits”. He urged producers to adopt defensive marketing strategies, work with experts, and prioritize staying in business until the cycle turns. Accepting less-than-ideal prices today may be the key to ensuring long-term survival.
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