Trouble In The Heartland...
December 09, 2008
At our advertising agency many of our clients are tied to agriculture so we tend to keep an eye in that direction for them and for our rural lifestyle radio show, Highway 6. And, my friends...there is trouble brewing in the Heartland.
Four months ago a barrel of crude was being traded at $170. Last night it fell to under $41. While that may seem like good news for those of us driving gas vehicles it spells trouble for the emerging ethanol industry that has been a major factor of improving the rural economy. Corn based ethanol is dead in the water unless the government approves an increase in the blending. Here is a story from Brownfield
Corn prices are now under $3.25 a bushel. (Four months ago it was trading at $7+.) However the price for fertilizer is still strong, diesel fuel is much higher than gas (think tractors and transportation) and cash rent for land was based on $7.00 corn...not what farmers are getting today.
The problem...even for city folks...is a major instability for the rural economy. That means manufacturing jobs, transportation jobs and yes, even a shortage in commodities. And that will impact everybody even if you don't have a clue what a PTO is.
So answers? Here are a couple:
Diesel Fuel costs are out of line...why and fix it
Fight the desire to buy food grown outside of the United States
As always...somebody is getting the shaft and one need simply follow the money.
For our clients, we continue to believe they are well positioned to go either way. But if I were advising farm equipment manufacturers I would suggest they start bragging about value and how they can improve yield. Otherwise...big trouble ahead for them.
Business "as usual" will not make it...now. What a difference just four months makes.
Michael Libbie - Insight Advertising, Marketing & Communications - Yep...we love agriculture.