Economist expects a squeeze in farm income if the interest rate increases
An ag economist expects net farm incomes to tighten if the Federal Reserve opts to raise the interest rate this week.
Ernie Goss with Creighton University tells Brownfield cost of production is high from skyrocketing input costs. “I will call it unsustainable paces. On the flip side, their revenues have also been growing. At this point and time, at least according to the bankers, the revenues for the farmers have been growing faster than the cost, but nonetheless, there is some squeeze there.”
He the latest Rural Mainstreet Index showed that 9 out of 10 rural bankers also expect interest rate hikes.
Goss says the Federal Reserve could raise the rate to 4 percent tomorrow at its May meeting.
Central Nebraska Farmer Clay Govier tells Brownfield he didn’t have to borrow as much capital this year. “We just have plenty of chase. We still have plenty of corn in the grain bins. We just opted like ‘we’re sure we’re not going to need as much this year.’ I imagine a lot of farmers are in that same position. It’s probably not as big of a deal.”
Goss says it could be an increase of 50 basis points, which would be the largest since 2000.
Ernie Goss, Creighton University: