When Kansas farmer Tom Giessel drove over a deer carcass and punctured a tire on his combine during harvest this fall, he did not have the time or cash to fix it. He borrowed his neighbor’s tractor to finish.
U.S. farmers are cutting costs any way they can to compete against cheaper producers in Argentina and Brazil. Four years of global oversupply have pushed down grain prices, reduced agricultural revenues and put more expensive producers under financial pressure.
In response, U.S. farmers have bought cheaper seeds, spent less on fertilizers and delayed equipment purchases as they seek to ride out the downturn. But more bumper harvest forecasts and rising energy prices herald another tough year for farmers in 2018.
“The logical thing to do is stop farming,” said Giessel, 64, who farms about 5,000 acres and has worked on the land all of his adult life.
Giessel has cut spending on what he can control – seeds, chemicals, fertilizer, rented land – and chewed through his farm’s savings. He stands to lose $93 an acre, or nearly $15,000, on one corn field alone this year.
“My burn rate is a raging fire. And I am no different than anyone else out here,” Giessel said.
Some farmers have had to sell assets to keep afloat. Others have gone into bankruptcy.
U.S. farmers have taken another hit this year because of rising prices of labor, fuel and electricity. Those costs together account for about 14.5 percent of total expenses and are largely out of farmers’ control. Interest expenses have also risen as banks have tightened credit to the agricultural sector.
Click here to see more...