The year 2024 is moving fast towards the quarter-century mark. Traveling in 32 states and engaging with many groups across the agricultural, economic, and business spectrums has provided insights on trends.

Interest rates

Interest rates remain resilient due to stubborn inflation, Federal Reserve credibility, and of course, this year's elections. If a decline in interest rates were to occur, it would probably be after the election and only a decline of 25 basis points.

Triple play

The negative triple play, meaning lower prices, inflated costs, and higher interest rates, is resulting in losses on income statements and burning through working capital in the agricultural sector. Tough decisions will need to be made on rents, leases, and operating expenses if conditions persist. More producers are requesting a debt refinance to replenish working capital, which is much more costly due to the increase in interest rates.

Capital expenditures

Machinery and equipment purchases have softened dramatically in many areas of the country. Used equipment is also seeing a discount in many of the row crop areas. Farmland values are observing steep declines in California almond country. However, sales are still strong in areas where producers have available cash and where demand exceeds supply.

Foreign buyers

Engagement with Mexican bankers at the Louisiana State University (LSU) Graduate School of Banking finds that purchases of farmland by foreign buyers is just not a U.S. issue. They indicated that purchases of prime farmland in Mexico are being made by Asians, specifically South Koreans. Often these purchases are made using cash with small requests for borrowed monies.

Recession

The recession in the U.S. has been averted so far due to deficit spending and loose monetary and fiscal policy. However, cracks in the U.S. economy are being observed. The population segment called ALICE, that is asset limited, income constrained, but fully employed, is observing financial stress. Credit card debt amongst this segment is the highest since the Great Recession and delinquency rates are accelerating on credit card debt and auto loans. Will this expand to other income segments?

Unemployment

Do not be fooled by the unemployment data. Much of the reported job growth is in part-time positions. Full-time job growth is negative, which is stressing household budgets.

Given this analysis, what can one do to place the odds in your favor?