Area farmers start to feel rising costs
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Ken Mohler and his wife Susan talk about how the future of farming is shaky.
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The drought hit first. Now the financial crisis threatens to deliver Rockbridge County farmers the second blow of a one-two punch that could have a lasting impact.
Farmers across the United States face the toughest lending environment in 25 years as bankers lose confidence in borrowers’ ability to repay loans. Rockbridge County Extension Agent Jon Repair says that area farmers are somewhat buffered from the credit crunch.
“Most of our producers haven’t had a tremendous amount of trouble borrowing money,” said Repair.
But that could change. Rising costs of fertilizer, fuel, seed and equipment have been aggravated by the recent falling value of grains and livestock.
“The price of grain has doubled since last year, but the price of what we sell has not,” said Charlie Leech, owner of Ingleside Dairy Farm in Rockbridge County, and fertilizer prices have gone up, too. “We just have to pay for it and go on. We don’t have a whole lot of choice.”
Leech milks about 240 cows each day at his third-generation farm 12 miles outside of Lexington. He says this year he will spend $100,000 more than usual on feed costs because of the worsening economy and effects stemming from a two-year drought.
Moreover, as the value of the dollar goes up, exporting milk becomes increasingly expensive. But Leech hasn’t had to worry about loan payments. Yet.
“We’ve had very little trouble getting an operating loan, but I could see where that could be a problem down the road,” he said.
Eighty percent of area producers farm only part-time, Repair said. That means they can rely on an additional source of income.
“They are fortunate enough to have that income, but the fear might be: Will they continue to have that outside income as the economy continues to suffer?” Repair said.
Ken Mohler says he wouldn’t be able to run his Simmental cattle operation if he didn’t work full-time for the Department of Forestry.
“We have to take money sometimes from the full-time job to make the farm payments and meet expenses,” he said.
Thanks to the relatively sound footing of independent commercial banks, the farming industry’s traditional lenders, farmers nationwide might be spared the kind of economic woes plaguing other sectors of the economy. Repair further attributes Rockbridge farmers’ comparative lending success to their conservative practices and well managed federal assistance.
Leech has relied on Farm Credit for his loans since 1950. Farm Credit is a national lending cooperative that specializes in conservative agricultural loans, and lends money on a cash-flow basis. That means the cooperative won’t give borrowers a loan that is larger than the amount of money coming in to the business.
Repair says that the cooperative service is one of the main reasons Rockbridge farmers have escaped the credit crunch so far.
“Farm Credit has been very diligent to be sure that they don’t overextend people that they loan money to,” he said.
Mohler also benefits from Farm Credit.
“We have been a member [of Farm Credit] for many, many years,” said Mohler.
“We’re very fortunate because they sympathize with the farmer and can help us through these hard times.”
But Mohler says that he has suffered because, while fuel and feed prices have doubled, bull purchases have been cut in half. That’s mainly because the farmers who used to buy his pure-bred registered bulls can’t afford to anymore.
Mohler and Leech agree that the future of farming seems shaky, especially if everyone from crop farmers to livestock producers has to start paying more for their loans on top of production and land costs.
“It’s a great way of life, but realistically, it’s an expensive hobby,” Mohler said. “Especially here in Rockbridge County.”
Produced by
Washington and Lee
journalism students.
Lead Supervisors:
Prof. Brian
Richardson
Prof. Indira Somani
Editing supervisor:
Prof. Pamela Luecke
Reporting Supervisors:
Prof. Doug Cumming
Prof. Indira Somani
Technical supervisor: Michael Todd