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Montana Ag Network: Market certainties not as high as many had hoped

Posted at 10:28 AM, Mar 05, 2020
and last updated 2020-03-05 12:28:11-05

Market certainties are not quite as high as many had hoped as farmers prepare for the 2020 growing season.

Despite the talk of trade deals, the bottom line is commodity prices aren't great and appear to be on a downward trend.

One of the more difficult challenges producers are facing this year is gaining working capital for the upcoming growing season. As market prices tumble and operational costs continue to climb, many banks are tightening up on their agricultural lending.

“If your revenue is decreasing over time, and your costs are increasing over time, and you carry a lot of debt, that becomes a difficult situation to manage,” said Barnett Sporkin-Morrison, Food and Ag Development Center Director with the Great Falls Development Authority.

Although the new trade deals do appear to sweeten the pot, the reality is many producers won’t begin to see the full benefits of new agreements until 2021. But low market prices aren’t something area producers necessarily have to settle for.

“It's really looking forward in the marketplace and saying if I don't want to be a market price acceptor, then one has to define how they are different than other producers,” said Sporkin-Morrison.

Farm economists such as Sporkin-Morrison recommend that producers do their homework in order to fully understand their buyers and their buyers wants. By thoroughly understanding the marketplace, producers will have a much better chance of profiting from their crops.

"Bankers will have more confidence in producers that are understanding of the marketplace in totality,” said Sporkin-Morrison. “Understanding where consumer behavior is going, of how they can capture more money in the marketplace.”