Page 61 - The GSE Report March-April 2018

FARM CREDIT SYSTEM / FARMER MAC MJARN.U-ARPYR.20210818
Farm income projected to fall 6.7% in 2018
Farm profits are projected to drop 6.7% to $59.5 billion in 2018—the lowest level since 2006, according to USDA projections
“This may now be what we consider a normal time,” said Carl Zulauf, a former agricultural economist at Ohio State University. “The period from about 2007 to 2013, that was the exceptional period. Farmers have had to confront the adjustment.” In 2013, farmer reported record earnings of $123 billion.
As a result of sluggish profits, farmers have been forced to take out loans to keep their operations afloat. In the fourth quarter of 2017, farmers boosted borrowing 51%-- the most in two years. Rising interest rates may further constrict liquidity this year. Farm borrowing costs rose to a 27- year high of 4.5% on average the last quarter of 2017, up from 3.7% the year ago period, further stretching repayment capacity. (Bloomberg News, Jeff Wilson and Alan Bjerga, 02/07/18)
Are technological advances reinventing farming?
Technology, particularly the Internet of Things, is boosting flagging sectors such as farming. Driverless tractors, robotic dairies, and drones to spray and monitor crops are being implemented to automate the agricultural process. “There are fewer folks out there who want to work as hard
as you have to in order to run a farm, so we’re seeing this technology continue to be used,” said Peery Heldreth, CEO of Farm Credit of the Virginias. “For us on the lending side, that means that our clientele will demand more from us in how they want their services when it comes to use of the technology.”
John Deere’s AutoTrac, the driverless tractor, follows programmed routes and apply automatic steering. The company estimates that over half of tractor models in use some form of auto-steer in 2017. More than 60% of new John Deere tractor models are fitted with AutoTrac software and operate in over 100 countries, making the company the largest operator of autonomous vehicles worldwide. John Deer is currently working on cab-less concept tractors and an autonomous lawn mower called Tango E5.
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