Harvest brings uncertainty on the farm this fall

Editor's Note: This column was included in the Sept. 25 version of The Pulse enewsletter.Fall means harvest, which should be a time of celebration, but for many farmers this year’s harvest will bring disappointment. Row crop farmers are facing difficult conditions. With a record amount of corn likely to be harvested this year, already-low prices may decline even further, meaning many farmers will lose money. .And it’s no better in soybeans. Due to political tensions, China — which typically accounts for half the United States’ soybean exports — is not buying any soybeans from U.S. producers at this time. China is turning instead to Brazil to meet its needs.As numbers are tallied at the end of this year, and planning takes place for next, many bankers are going to have to have difficult discussions with their farm customers. Some farmers will elect to store their grain, hoping that prices increase but the longer the wait, the higher the storage costs, and the higher the price has to go simply to stay even. As farmers think about next year, they may be tempted to skimp on fertilizer, which is getting more costly all the time. But the result of that move may be lower yields, which could make next year even more difficult than this year. The one bright spot is cattle, which is commanding very strong prices. Meat, which at one time was falling out of favor with some consumer segments, is in high demand at a time when the supply is very limited. This is good news for producers raising these animals and the banks that are financing their operations. Are conditions today as dire as they were in the 1980s? Fortunately, no. Farmland prices are very strong and, unlike in the 1980s, land is holding its value. Furthermore, most banks today lend on only a small portion of the value of that land rather than the full value as was common in the 1980s. This leaves a lot of collateral for financiers to work with. But while high land values can mean strong equity for producers, it doesn’t necessarily solve a cashflow problem.Bankers who finance farmers have an important six months ahead of them as they sort out the current situation with each of their customers and carefully plan for 2026.