Bumper farm crops in the U.S. the past two years have made food less expensive to buy. But it's putting the squeeze on farmers, especially those who lease rather than own their land.
And that means many farmers are cutting back the size of their crops, even in some cases walking away from leases with landlords according to Reuters.
“Across the U.S. Midwest, the plunge in grain prices to near four-year lows is pitting landowners determined to sustain rental incomes against farmer tenants worried about making rent payments because their revenues are squeezed. Some grain farmers already see the burden as too big. They are taking an extreme step, one not widely seen since the 1980s: breaching lease contracts, reducing how much land they will sow this spring and risking years-long legal battles with landlords.”
Reuters says that in the Corn Belt 40% of all agricultural land is leased rather than owned by farmers.
And the pinch won't just be felt by farmers and landlords.
Heavy machinery companies and banks will also be taking a hit.
All thanks to record crops.
Remember in fairy tales when kingdoms were peaceful and there was plenty to eat that that was a sign of good times.
I guess that's why they call them fairy tales.
I call the opposite Obamatales.
And here’s another Obamatale:
Interest rates will dominate the market headlines early this week as Fed Chair Janet Yellen testifies before Congress on Tuesday.
Fed watchers are expecting Yellen will be upbeat about the economy and employment as the market digests a raft of better news in January about labor and employment.
As employment picks up people have more money… which then causes inflation. And that means analysts are expecting for the Fed to raise interest rates perhaps by June.
And that would explain why the 10 Year Treasury has moved from around 1.6% to over 2% in just a couple of weeks.
But it also shows the prime flaws of our monetary policy.
Food and energy prices go up-- which is bad for us-- and no one cares. When wages go up—which is presumably a good thing for someone-- that's when the Fed has to put a stop to it.
I’m not a big fan of the Obamatale of “income inequality”, but if you wanted an example of how liberal, Keynesian economics punishes the working class, then our monetary system is a perfect example.
They treat things like food and energy as financial assets, which must increase in value always—that is make those prices inflate—and people’s pay checks suffer as a result. Then they treat wages like any hint of an increase will cause massive inflation with people using wheelbarrows of cash just to buy loaves of bread.
I seem to remember that the last round of high inflation in the 1970s was accomplished because of higher energy prices, and was exacerbated by stagnant wages…the exact outcome we have witnessed as we have “enjoyed” a decade of very low interest rates.
I seem to remember too that once crop prices eventually collapsed in the 1980s as inflation eased, that farmers had trouble making rent payments.
Thus one Obamatale relates to all the rest.
Sleep well, folks.