The Dutch have a saying: “In prosperity, caution; in adversity, patience.”
It appears that during our recent good times, Wall Street and Washington weren’t nearly cautious enough. Now, in the coming hard times, we’re all going to have to prove that we can persevere.
We farmers will do okay. (Thanks for asking.)
So will everyone else, in the long run. I was born during the Great Depression, and I’ve lived long enough to see America go through cycles of boom and bust. A lot of people are saying that this bust is bigger than most of the others. We’ll see. No matter how low we drop, however, I’m confident that America will bounce back. We always do.
At the same time, we shouldn’t sit still. Patience is a virtue, but passivity isn’t. We need smart policies to make sure our looming recession is as short and painless as possible. Despite what some politicians are saying, this is no time to turn against free trade–farmers need it, and so does everybody else in America.
Right now, farmers are feeling the pinch of falling commodity prices. It’s not clear how much of this has to do with the financial crisis. Some of it is entirely normal: Prices usually come down at harvest time. What’s more, this year’s harvest is big. Anticipating good prices, farmers did a lot of planting in the spring. We’ve also improved our yields by taking advantage of all the latest technologies.
A combination of quantity and quality has delivered us a bounty.
I never believed all the talk that we had entered a new period of permanently high commodity prices. Just as the stock market goes up and down, so do commodity prices. They always have and they always will.
The bottom line is that we have an abundance of food right now. Although it may become more difficult to borrow money in the United States, it won’t be hard to buy a meal. The recession will be a challenge, but our country’s future will not involve destitution. Belt tightening will remain a metaphor rather than become a literal reality.
Many farmers are fortunate to have their investments tied up in land, machinery, buildings, and livestock. Ownership of these assets probably will hold their value better than equities. Lots of farmers own stock, of course, and the market is battering them just like everybody else. Yet investment in their own farming operations may help many farmers weather this storm.
Farmers nevertheless can expect to see plenty of challenges–and therefore consumers can as well. Our costs of inputs like seeds and fertilizer may come down with commodity prices, but they haven’t yet. These costs will be passed on, as costs always are no matter what the business. It means that grocery-store bills threaten to remain high or perhaps even go higher.
Then again, everyone will be battling for scarce consumer dollars: In September, retail sales dropped by 1.2 percent, which was more than most analysts had predicted. Everyone is anxious about the economy. It could mean some great Christmas-season bargains for shoppers who are willing and able to spend.
The strengthening dollar also has negative implications for us because we rely so heavily on exports. In 2008, exports have represented one of the few bright spots in our economy–and not just for agriculture. Without the growth we’ve seen for manufactured products and other kinds of exports this year, our economy already would have slipped into a recession.
The current financial crisis isn’t limited to the United States, so we can’t be sure what foreign demand for our goods and services will look like in 2009. But odds are it won’t grow. That’s why our officials should do everything they can to remove artificial barriers between sellers here in the United States and buyers in other countries.
Rather than falling for the false promise of protectionism, we must embrace the genuine hope of increased opportunity. Otherwise our adversity will require a lot more than mere patience.
Dean Kleckner, an Iowa farmer, chairs Truth About Trade & Technology. www.truthabouttrade.org