Last week, I received a thoughtful email from a 25-year-old Missouri farmer regarding an opinion I wrote in March 2011 titled “When the U.S. dollar collapses . . ..” He recently re-read the article and wondered if the dollar is less threatened today. And he asked: “Where do you think our politicians stand on the importance of the Farm Bill, crop insurance and the nutrition programs that we all know are taken advantage of to their max by lazy and unconcerned individuals who cannot even help themselves and give nothing back into society?”
But he wasn’t done. “My final question is: I am looking to purchase some small acreages of farm ground next to my parents so that I may continue the family farm. I believe I’m staying well within my reasonable means expecting so be able to sell $4.50 corn and $10 beans.
“Are these reasonable assumptions or will they be far worse if our dollar doesn’t shape up? Any advice you have or comments will be much appreciated. Thank you.”
How would you answer his questions?
My first reaction was: “Boy! One could write whole books on those questions!” So I went back and re-read that column which also appeared in the March 2011 American Agriculturist. Well, here’s my response to him:
As you may be aware, the Republican national convention debated over whether the U.S. should return to the “gold standard” as part of its party platform. It’s highly unlikely it’ll happen because the national debt far “outweighs” the value of any and all gold locked away or buried in this country. The same is true for virtually every developed nation on earth. How does that relate to your question, you ask?
If the dollar collapses, so will most if not all other world currencies. Then the only answer is one world currency probably valued according to the hoards of all precious metals held by each country – clearly a worst case scenario. The United States would be relatively better off than most. However, the value of our assets would plummet . . . except possibly for one commodity – productive farmland.
No one with any common sense wants that to happen. That’s why it’s imperative to rein in federal spending. Unfortunately, now it would require almost draconian measures that would ensure that any politician that voted for them would be thrown out of office. That’s my opinion, anyway.
That’s why it’s imperative that farmers do not grow reliant on Uncle Sam. You must find ways for your farm to be profitable without his help. And many are doing just that.
You’re correct in looking for farmland to either own or control via long-term lease – 10 to 15 years. That gives you a measure of control over your business’ future. He who controls the land owns his future.
I hope your grain price projections are true. But I fear they’re a tad high unless you’re exclusively in value-added commodities. That’s the most promising premium for corn and soybeans.
It’s always wise to be conservative in your price projections. That’ll make life much less stressful.
One last thought: If you’re in the business of producing food for direct or indirect sale to consumers, what you raise will always be in demand regardless of what happens to the U.S. dollar.
So, the bottom line is that I don’t know much. I’m delighted that you’re thinking and planning ahead. It’ll serve you well.
And thank you for making me think!