Farm equipment industry has seen large layoffs and the shutdown of many manufacturing lines at the large companies. The secondary market is likely to hurt the worst. Nothing good happens when sales drop by 70%. This has resulted in many mergers and acquisitions and the cutting of many employees that will never come back. Farmers’ bargaining power for buying equipment drops when large ownership groups acquire other dealerships, in some cases as much as 44.

Grain farmers are being very financially challenged. If they missed the move down in grain prices over the last 18 months, the challenges are significant. Many producers are going to have to borrow against equity and land, and with interest rates at 8% or higher, cash flows will continue to worsen. As this is written it would appear the government is going to come in with an assistance program that may pay corn producers as much as $100 per acre and soybean producers $30-40 per acre. This will at least help keep some farmers in business that may not have made it, but it’s not a long-term solution.

Processing margins are tightening in the feed industry. When prices get low as they are now, there are not as many opportunities to make money. All one must do is look on the New York Stock Exchange at some of the larger feed companies and see the trend in their stock prices in the last year to get a flavor for what’s going on.

The retail ag industry in chemicals and fertilizer businesses will continue to contract. As grain producers continue consolidation, marketing to those producers will continue to change as well.

Bank consolidation will continue in rural America. I wrote about this extensively a year ago in this publication, and now with President-elect Donald Trump coming into office, regulations will soften, and many banks that have yet to recover from the sharp increase in interest rates reflecting open losses on their balance sheets will be absorbed by larger banks with positive balance sheets.