The agriculture sector is suffering from working capital that’s fallen to critically low levels according to data from forecasting firm Agricultural Economic Insights.
The group recently analyzed data put out by the Economic Research Service, saying the declines in working capital are stark. Brent Gloy, a Nebraska farmer and economist, writes, “Working capital is projected to fall by 25 percent from last year to this year. This is right on the heels of a 30 percent decline from 2017 through 2018.”
Gloy says the current level of working capital amounts to just 31 percent of what was available back in 2014. It’s only 23 percent of the working capital that was available in 2012. “The Market Facilitation Payments are large enough to actively move the needle on financial conditions in the Ag sector,” said Gloy. “However, they will clearly not rebuild working capital to levels that are necessary to give long-term financial stability to the American agricultural sector.”
Gloy also says the declines in the farm sector’s working capital are substantial and should cause some serious concerns about the financial health of the farm sector.