Agribusiness exchange traded funds could experience stunted growth as depressed grain prices squeeze farmers’ profit margins.
U.S. farmers are beginning to cut back on farming equipment as the low crop prices and rising costs diminish income, reports Alan Bjerga for Bloomberg.
The U.S. government projects that farm income this year is heading toward the third consecutive decline and will post its largest fall since the Great Depression. Net-cash income from farm activity is expected to plunge 22% to $89.4 billion, the biggest drop off since 1932.
For instance, Illinois grower Jason Lay stated that he will purchase 30% less fertilizer for 2,500 acres of corn and soybeans, 7% fewer seeds for spring planting and no new equipment, with crop futures now trading near a five-year low.
“You spend when times are prosperous so you don’t need to when they’re not,” Lay said in the Bloomberg article. “That’s how you make it through.”