On this week's Ag Report on
, Paul Anderson, chief credit officer for
, discusses how credit quality among Michigan producers is at an all-time high as we enter a period of lower prices.
"While prices have retreated for many commodity crops, producers have very strong balance sheets," explained Anderson. "Strong working capital positions will provide producers time to adjust their operations for what is anticipated to be an extended period of lower crop prices."
According to Anderson, safety net provisions in the new Farm Bill will allow farmers to manage their cash flow risk and maintain a sound financial position. Markets for inputs such as fertilizer and chemicals, along with equipment, may see a downturn. We will also likely see land rent and farmland prices correct from unsustainable to sustainable levels.
"It is fair to say that 2015 and 2016 will present many challenges and opportunities for producers," said Anderson. "Fortunately most producers start this adjustment period from a very strong financial position and, as always, the majority will make the necessary changes to remain successful."
You can hear this week's Ag Report here.
The Ag Report on
is brought to you by the
. It airs weekly on
and features voices from Michigan's growing agriculture sector.