“This Time Is Different: Why the Current Low Commodity Prices Lead to Different Outcomes than in the 1980s”

Van Buren Seminar
Thursday, November 9th 3:30-5:00pm
Room 250A, Agricultural Administration

Gary Schnitkey, Professor and Farm Management Specialist in the Department of Agricultural and Consumer Economics at the University of Illinois, will present “This Time Is Different: Why the Current Low Commodity Prices Lead to Different Outcomes than in the 1980s” on Thursday, November 9th from 3:30-5:00pm in Room 250A, Agricultural Administration (2120 Fyffe Road, Columbus, OH 43210).

Abstract: Relative to those in the 2006 to 2012 time period, corn and soybean prices have been much lower since 2013, leading to lower farm incomes and some concern about the financial position of farms. Concerns also exist that farmland prices will continue to decline. Herein, comparison of the current environment to the situation during the 1980s agricultural crisis and the 1998 pork crisis suggest differences. Moreover, financial performance measures of Illinois grain farms from 2006 onward differ from those in the 1980s. Overall, working capital has deteriorated substantially since 2013, but debt-to-asset positions remain strong on most farms. Financial and managerial responses are much different now than in the 1980s. Continued low prices likely lead to adjustments in farmland rental rates, which could then lead to downward farmland prices. While they will increase, loan defaults likely will not reach levels experienced during the 1980s.

Funded by the Van Buren Program in the Department of Agricultural, Environmental, and Development Economics This event is open to the public. No RSVP is necessary.