How the Fed’s Interest Rate Decision Affects Farmers

If you think you only needed to pay attention if the Federal Reserve raised rates Thursday, you’re wrong. While rates may have stayed the same for now, the financial and economic environment for farmers is changing fast.

Environmental & Natural Resource Economics: The Austrian ViewWhat a mess we have made over the past 150 years. — jtl, 419

How the Fed's Interest Rate Decision Affects Farmers

A Handbook for Ranch Managers If you think you only needed to pay attention if the Federal Reserve raised rates Thursday, you’re wrong. While rates may have stayed the same for now, the financial and economic environment for farmers is changing fast.

Planned Grazing: A Study Guide and Reference ManualHere’s what you need to know about the Fed’s decision to keep the federal funds rate alone, at a target of 0% to .25%.

  1. Your cost to borrow money will remain relatively low, at least for now. “Farmers will be able to keep borrowing at low interest rates,” notes Tommy Grisafi of Advance Trading. That’s critical for many producers, who are finding themselves caught between low commodity prices and flat-to-rising production costs. The solution for many? Operating loans, which are becoming both larger and more important to many growers at this point in the cycle, according to Chris Barron of Ag View Solutions. “When interest rates go up, it’s going to be a big hit to those who have an operating line of $500,000 or $1 million,” says Barron, who advises grower customers on margins and profitability. “And it’s not that hard to find a operation who are big enough to need a line of credit that size.” Farmers who are struggling may already be feeling the pinch of higher rates, though.
  2.  Combat Shooter's Handbook Reconnaissance Marine MCI 03.32f: Marine Corps Institute The Betrayed: On Warriors, Cowboys and Other MisfitsYou will see market volatility in the short term. With many expecting the Fed to raise rates Thursday for the first time in nearly a decade, “the market had a vicious reaction” to the decision that rates would stay the same. Why did the Fed hold its position? They’re worried not about the U.S. economy, which Fed Chairman Janet Yellen praised in her remarks, but the global economy, specifically China. “The situation abroad bears close watching,” she said. However, the short-term impact of the Fed decision on the market should quickly fade as the trade adjusts to the new information. “By the end of this week, it will be old news,” Grisafi said.
  3. The Essence of Liberty: Volume I: Liberty and History: The Rise and Fall of the Noble Experiment with Constitutionally Limited Government (Liberty and ... Limited Government) (Volume 1)  The Essence of Liberty: Volume II: The Economics of Liberty (Volume 2) The Essence of Liberty: Volume III: A Universal Philosophy of Political Economy (Liberty: A Universal Political Ethic) (Volume 3)The impact on commodities could be complicated. Today’s news did bring the dollar down, making higher-priced U.S. grains more affordable in the global market. Grisafi worries that continued access to cheap debt will lead to a deflationary situation. “We’re closer to deflation than inflation,” he says. “Deflation is a really horrible thing for a commodity grower,” because it drains demand and pushes prices even lower. “If I were a farmer, I’d be disappointed by this decision,” Grisafi says. “But I don’t think the Fed cares about commodity growers. I think they care about the Dow Jones Industrial Average and what that number on your phone is at the end of the day.”
  4. You need to plan for higher rates. Yellen said in her remarks that the expectation is that the federal funds rate will rise to 1.5% by late 2016, 2.5% in late 2017, and 3.5% in 2018, so increases are coming. You can manage those hits by improving your efficiency and productivity in your fields and in your financials, which will allow you so to provide detailed cost projections and yield estimates to your banker. “Those farmers who are dialing those numbers in will be able to negotiate a better interest rate, simply by virtue of all that information,” Barron says.

What do you think about the Fed’s decision to leave rates alone? Are you relieved or concerned? Let us know in the comments.

Environmental & Natural Resource Economics: The Austrian View

edited by

Dr Jimmy T (Gunny) LaBaume

Is now available in both PAPERBACK and Kindle

BookCoverImageMurray N. Rothbard was the father of what some call Radical Libertarianism or Anarcho-Capitalism which Hans-Hermann Hoppe described as “Rothbard’s unique contribution to the rediscovery of property and property rights as the common foundation of both economics and political philosophy, and the systematic reconstruction and conceptual integration of modern, marginalist economics and natural-law political philosophy into a unified moral science: libertarianism.”

This book applies the principles of this “unified moral science” to environmental and natural resource management issues.

The book started out life as an assigned reading list for a university level course entitled Environmental and Natural Resource Economics: The Austrian View.

As I began to prepare to teach the course, I quickly saw that there was a plethora of textbooks suitable for universal level courses dealing with environmental and natural resource economics. The only problem was that they were all based in mainstream neo-classical (or Keynesian) theory. I could find no single collection of material comprising a comprehensive treatment of environmental and natural resource economics based on Austrian Economic Theory.

However, I was able to find a large number of essays, monographs, papers delivered at professional meetings and published from a multitude of sources. This book is the result. It is composed of a collection of research reports and essays by reputable scientists, economists, and legal experts as well as private property and free market activists.

The book is organized into seven parts: I. Environmentalism: The New State Religion; II. The New State Religion Debunked; III. Introduction to Environmental and Natural Resource Economics; IV. Interventionism: Law and Regulation; V. Pollution and Recycling; VI. Property Rights: Planning, Zoning and Eminent Domain; and VII. Free Market Conservation. It also includes an elaborate Bibliography, References and Recommended Reading section including an extensive Annotated Bibliography of related and works on the subject.

The intellectual level of the individual works ranges from quite scholarly to informed editorial opinion.

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About Land & Livestock Interntional, Inc.

Land and Livestock International, Inc. is a leading agribusiness management firm providing a complete line of services to the range livestock industry. We believe that private property is the foundation of America. Private property and free markets go hand in hand—without property there is no freedom. We also believe that free markets, not government intervention, hold the key to natural resource conservation and environmental preservation. No government bureaucrat can (or will) understand and treat the land with as much respect as its owner. The bureaucrat simply does not have the same motives as does the owner of a capital interest in the property. Our specialty is the working livestock ranch simply because there are so many very good reasons for owning such a property. We provide educational, management and consulting services with a focus on ecologically and financially sustainable land management that will enhance natural processes (water and mineral cycles, energy flow and community dynamics) while enhancing profits and steadily building wealth.
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