New York, New York
April 6, 2009
Rabobank recently launched a survey to gauge farmers'
confidence, and found that, while farmers' outlook on the
economy generally mirrors that of the overall population, more
than half of farmers surveyed are employing risk management
strategies to help navigate this difficult economic climate.
"Our survey demonstrates that U.S. farmers and ranchers are
tackling the current economic environment head on by making
smart choices to help them weather the storm," said John Ryan,
president and CEO for Rabo AgriFinance. "While many are hurting
because of the economy, there is some optimism that the
situation will improve next year."
According to the
Rabobank Farm & Ranch Survey, more than half of U.S. farmers
have recently implemented or plan on investing in risk
management or marketing strategies. Among those, pre-selling
crops/livestock is the most regularly used risk management
approach, followed by hedging future commodity sales and lock-in
margins.
"We are in the midst of difficult financial times, but this
survey illustrates that farmers are taking steps to mitigate
their risk, which will ease concerns about the future," said
Ryan.
However, deployment of risk management strategies varies based
on the degree of concern about the U.S. agricultural economy.
While 45 percent of farmers who are concerned about the
agricultural economy use at least one risk management strategy,
the percentage employing risk management solutions increases to
60 percent for farmers who are somewhat concerned and to 80
percent for those who say they are not concerned.
In addition to risk management tactics, the Rabobank Farm &
Ranch Survey looks at business conditions, economy concerns and
expansion plans among U.S. farmers, ranchers and agricultural
producers.
Business Conditions
While revenue is declining for many farmers, the cost of inputs
is improving. Significantly fewer farmers indicate their costs
are worse this year (67 percent vs. 94 percent in 2008),
according to the report. In fact, 30 percent of farmers expect
input costs to decrease.
Additionally, fewer farmers expect conditions to get more
difficult when compared to the same period last year. In other
words, less than 20 percent of farmers thought 2009 would be
better than 2008, while 30 percent think 2010 will be better
than 2009.
Agricultural Economy & Financial Concerns
In looking ahead, nearly half of those surveyed expect the
agricultural economy to worsen in 2010, and most are currently
concerned about the economy. Nearly nine out of 10 farmers are
concerned about their own economic situation, and nearly eight
out of 10 say they would have been more optimistic if current
economic conditions had been better, according to the survey.
However, three out of every four farmers said their outlook for
the future would be more favorable if their own financial
situation or the overall economy was better. Nearly 90 percent
of farmers who actively manage risk feel that their responses
would have been more favorable about the future compared with
those who do not (72 percent). This survey finding suggests that
the current economic condition is driving the adoption of risk
management solutions.
Expansion Plans
While hiring of employees and land expansion are relatively
stagnant among farmers surveyed, U.S. farmers' intentions to
purchase equipment are on par with 2008. The majority of farmers
(77 percent) have kept the same workforce size, and nine in 10
do not plan to buy or sell land.
Additionally, one in three farms expect to purchase farm
equipment next year, but will look to used rather than new
equipment (43 percent).
Methodology
The study was conducted to gauge farmers' confidence among
target farming regions in the United States. An independent
survey company conducted 458 computer-assisted telephone
interviews in the first half of February 2009. Farmers who owned
or operated a farm grossing $250,000 or more in one of three
U.S. census regions -- the Midwest, Southern U.S. and Western
U.S. -- were targeted. Additionally, a baseline survey was
conducted, but not released in 2008, and is used as comparison
for this survey.
Regional information and further data is also available at
www.rabobankamerica.com/public/survey.html
Rabobank is a global financial services leader providing
institutional and retail banking and agricultural finance
solutions in key markets around the world. From its century-old
roots in the Netherlands, Rabobank has grown into one of the 25
largest banks worldwide, with over $800 billion in total assets
and operations in over 35 countries. Rabobank is the only
private bank in the world with a triple A credit rating from
both Standard & Poor's and Moody's, and is ranked among the
world's safest banks by Global Finance magazine. In the
Americas, Rabobank is a specialist in sophisticated,
customer-driven solutions in the Global Financial Markets and
Corporate Finance arenas and provides banking services to
corporate food and agribusiness clients; retail and commercial
banking services in California; leasing; and a full range of
agricultural finance products to American agricultural
producers. |
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