The “it’s the economy, stupid” discussion continues this week, largely because of the testimony of Federal Reserve Chairman Ben Bernanke. Speaking before Congress last week, Bernanke uttered the following phrase when answering a question about the health of the U.S. economy.
“Even as the Federal Reserve continues prudent planning for the ultimate withdrawal of monetary policy accommodation, we also recognize that the economic outlook remains unusually uncertain,” he said in a prepared statement. Naturally, these last two “u” words sent the stock market into a freefall and confirmed fears that the danger of a double-dip recession is more real than ever.
Back in the agricultural world, the mood isn’t nearly as glum. As I wrote in my column a few weeks back, agriculture seems to be weathering the economic storm pretty well. From what folks I’ve talked with have said, money is being spent by grower-customers, crop inputs are moving out into the field, and custom application work is brisk. Despite some drought and flooding in the Midwest, the nation’s corn and soybean crops seems like they are on pace for a strong harvest year. This was particularly true during my recent visit to Maryland and Eastern Pennsylvania, where most of the corn and soybeans I saw were a healthy shade of green.
However, ag suppliers are still very, very cautious. While on my trip, I visited two companies that cater to the ag retail marketplace – one in construction and one in manufacturing. Both reported having good sales during 2010, at least compared with the inactivity that plagued the whole industry in late 2008 and 2009. But both longed for the giddy days of 2006 and 2007, when orders poured in with little or no marketing effort.
“Yes, customers are buying from us this year vs. last year,” said one marketing manager. “But they aren’t just buying to buy new like they did a few years ago. Now, they are being very selective about what they buy, performing much due diligence before making the decision to place an order.”
If this is the new normal in ag retail, I don’t necessarily see this as a bad thing. Being historically cautious has been a hallmark of agriculture for hundreds of years, especially when a one-day severe storm or natural disaster can wipe out months of effort. For one thing, this is making suppliers plan better and work harder to capture market dollars. Looking at this year’s equipment show line-ups, I’ve been amazed at the number of new product offerings being launched for the 2011 season. It seems as if nothing spurs innovation like a little market caution.
In conclusion, I would describe the state of agriculture as anything but unusually uncertain. Things may be unusual in 2010 compared with the past, but they are far from uncertain.