Purdue: Ag Economy OK So Far

The silver lining in today’s economic climate may well be the agriculture industry, according to Purdue University economists.

An ailing financial industry is going to need strong medicine to pull out of a deepening credit crunch brought on by risky loans and deregulation, the economists said on Oct. 6.

Economists from Purdue’s Department of Agricultural Economics, Krannert School of Management, and the Department of Consumer Sciences and Retailing said the $700 billion federal bailout package should provide short-term help for lenders but won’t cure the nation’s economic ills. They prescribed tighter regulation of the banking industry and derivatives markets, combined with a culture that saves more and spends less.

Despite government intervention, tough economic times are ahead, said Phillip Abbott, an agricultural economist. "We are going to go into a recession, regardless," Abbott said. "It’s just a question of how severe and how long-lasting it will be."

The agriculture industry might be in the best financial shape — for now, said Michael Boehlje, an agricultural economist.

"So far, availability of credit is not a big concern," Boehlje said. "At this point we don’t have the freezing of credit markets for the ag sector. The more serious issue for agriculture is the potential recession."

A recession could hurt the sale of agricultural products and drive up production costs.

The panel discussion is available for viewing online. Log onto the Purdue Agriculture Web page and click on the financial crisis Webcast discussion button.
 

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