US farm finances 'relatively stable' despite China trade war

FILE PHOTO: FILE PHOTO: Farmer Lucas Richard of LFR Grain harvests a crop of soybeans at a farm in Hickory, North Carolina, U.S. November 29, 2018. REUTERS/Charles Mostoller/File Photo/File Photo
FILE PHOTO: FILE PHOTO: Farmer Lucas Richard of LFR Grain harvests a crop of soybeans at a farm in Hickory, North Carolina, U.S. November 29, 2018. REUTERS/Charles Mostoller/File Photo/File Photo

US farmers are in “relatively stable” financial health despite a bruising trade war between the United States and China that has weakened crop prices, the chief executive of farm supplier Nutrien Ltd said this week.

Farmer bankruptcies in 2018 were lower than the previous year, and below the 10-year average, CEO Chuck Magro said on a quarterly conference call.

Farmers’ increasing debt is largely due to purchases of land, the value of which has been firm, he said. Nutrien has also seen an increase this year in pre-payments for crop inputs such as seed, fertilizer and chemicals.

“Their balance sheets are relatively stable,” Magro said. “What we have to worry about is liquidity and the cash flow from the farms. That comes down to margins.”

Prices of US soybeans, which face steep tariffs in China, are down year over year, but have recouped some of their losses since hitting a low point last summer.

Magro said he expects farmer economics to improve in 2019.

Nutrien is the world’s biggest fertilizer producer and sells directly to US farmers via a large chain of retail supply stores.

The US Department of Agriculture said in November that US net farm income for 2018 was likely to decline by 12pc to $66.3 billion.

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US Farm Credit chief executives warned White House officials in January that 2019 could cause more financial losses for farmers if the trade dispute with China is not resolved.

A trade settlement between the US and China would boost crop prices and lift “a cloud of uncertainty” from the sector, Magro said.

Reuters


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