Waiting For A Return To Normal? What If This Is It?
After several years of weak commodity prices, we still hear from many farmers who say they are waiting for things to return to normal. By that, they tend to mean they’re looking for a return to the 2010-2014 period when corn and soybeans were at record prices and land prices were advancing consistently.
But what if that period wasn’t so normal at all? Many farmers are too young to recall that for several decades, prices on corn and soybeans ebbed and flowed in a range well below those we see today.
“We went through a remarkable period when interest rates were near zero and some major countries had a nearly insatiable appetite for American corn, soybeans and other products. This drove up prices, resulting in strong farm profitability. As is natural in good times, farmers loosened their belts a bit,” said Scott Steffes, president of the company.
Such times, he noted, provide an opportunity to buy more land, upgrade equipment and sometimes to even build a new home. But financial markets have a way of returning to historical norms.
That’s not necessarily bad, Scott noted. It just means we have to adapt to changing realities.
“The danger comes when things tighten up and we fail to adjust for the changes. The history of agriculture is that we have good and bad years. But the truth is that even the times we’re experiencing now are good by historical standards. Borrowing costs remain very low. Inflation is near zero. And farm families that have adjusted their lifestyles and expectations are doing well. But many of these things can change overnight, so it’s important to be vigilant and have a contingency plan,” he said.
If that contingency plan includes selling assets, you’ll want to get the best price you can. Fortunately, prices are holding up well on many assets – especially high-quality land and late-model equipment.
“The best way to get a strong price for your combine, or for your farmland, is to expose it to numerous prospective buyers and let them compete. Our effective marketing makes them aware of assets coming to auction. In addition, our long track record works to the advantage of our sellers. Many of them have bought land, equipment or other assets from Steffes over the years, so they know and trust us,” he said. Those seeking to sell assets in the spring may visit www.steffesgroup.com or call 701-237-9173.