UNL Extension Public Policy Specialist Brad Lubben says while the drop is substantial from 2013 to this year, farmers saw record income levels before that.
“We do have adjustments to make,” Lubben says. “Ag producers will have to tighten their belts and make sure they make sound management and finance decisions, but it is more of a return to a longer-run normal than it is falling out of bed. Caution, yes, but not much concern yet.”
The drop is due in large part to lower crop prices and reduced government payments. Lubben says despite that, the state of the ag economy is generally good.
“Farm income levels are still strong by historical standards,” Lubben says. “We have such a strong financial position right now and low interest rates that debt service is very manageable. We have a lot of strength coming into this current crunch.”
Lubben says the challenge for farmers now will be to fine tune their operations and pay close attention to the bottom line.
“There is a never-ending need to keep honing their skills and making better management decisions, more efficient and cost-effective decisions,” Lubben says. “That will be a challenge for the next couple of years. Crop prices have fallen dramatically in the last year-and-a-half and input costs haven’t caught up yet.”
Lubben says while producers had been receiving higher prices, input costs and land values have both gone up rapidly.
By Jerry Oster, WNAX, Yankton