Possible Threats
November 7, 2011 Two weeks ago, our magazine held its annual PACE Council Meeting in Chicago. For those we might be unfamiliar, the PACE Council is made up of various industry leaders from ag retail, trade associations, academic representatives and market suppliers. Once per year, this group gets together for a day-long session to discuss industry trends and try to figure out where agriculture in general is headed during the years ahead.
Concerning the current state of agriculture, things couldn’t be better, according to council members. Despite a shaky spring, where excessive rains and flooding seriously delayed plantings, growers were apparently able to still come in with crop yields that are par with historic averages for both corn and soybeans. Given this situation, commodity prices have remained high and grower income is at near-record levels.
“It could have been very bad this year considering how bad the weather was in much of the country,” said one PACE Council member. “Overall, though, it all worked out pretty well.”
Naturally, with times so good at the moment, the question inevitably came up – what might derail this boom heading into the 2012 season? Besides warnings about more severe weather conditions and/or commodity prices suddenly dropping (if U.S. exports unexpectedly dip, for instance), a few PACE Council members thought the 2012 Farm Bill could put a damper on things.
“Right now, it’s our understanding that everything in the prior Farm Bill is on the table and could be changed or taken away,” said one association representative. “That could have a very negative impact on agriculture.”
Then of course, there’s that complete unknown that might occur, such as when very high prices basically caused all growers to stop buying fertilizer during the fall of 2008, causing an overall market crash. “The threats to this industry could come from many different places,” observed one member.
Given all these factors, the takeaway from the 2011 PACE Council meeting was clear – agriculture should enjoy the good times that are taking place right now, but prepare for a rainy day just in case.
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