Accelerated farm borrowing becomes a troubling trend

Chuck Farr, a veteran crop consultant in Crawfordsville, Ark., told me today that it’s been unsettling to hear one farmer after another remark about how little time it's taken this season to rack up debt.

"They're saying that they owe the Farm Credit system more money at this point in 2006 than they did for the entire 2005 production season," said Farr, whose Mid-South Ag Consulting firm works across all the major field crops in his area. “I’ll bet I’ve heard that 20 times. There already has been a world of farm sales, and we’re still getting notices about new sales as growers find out they’re not getting loans."

The situation, he said, seems to be worst west of his area in a part of the state more heavily into rice and soybean production.The high cost of fuel and fertilizer, plus dry conditions in 2005, took a toll on rice and soybean producers, Farr said. Not to mention low commodity prices.

Growers in his area, who are mostly cotton producers, weren’t hit quite as hard. One reason, he said, is that it takes less pumping to irrigate or flood their heavier ground compared to areas to the west with more silt loam soils. But that's a relatively small difference when you take into account how much all inputs have risen, he added.

“What we’re seeing in that part of the state may be an indicator,” Farr said. “Next year, we might be finding the same situation in our cotton area, barring some major improvement.”