Years of drought compounded by recent drops in commodity prices have left farmers all over Texas– including the South Plains–with worries about their profits.
Thursday, EverythingLubbock.com sat down with Tim Mc Donald, CEO of Ag Texas Farm Credit to learn about how the markets impact crop insurance.
AG Texas is a farm credit cooperative, owned by all the members who do business with them. Annually, Ag Texas sends out roughly 50% of it’s profits back to its members in the form of patronage checks. Ag Texas recently sent out this year’s patronage checks, which totaled 12 million dollars. That number topped the amount sent out last year, which is a good thing for farmers who can uses the extra money during the dip in the markets.
“At this point in time, all commodities are really feeling the effects of down markets,” McDonald explained. “Cotton is especially feeling it right now because we don’t have the government support that we’ve had for years. The farm program payments have changed, so really the main thing that we have left is our crop insurance component.”
As of 2016 Ag Texas Farm Credit has been in business for a century, and McDonald has been in the industry for a quarter of that time.
He said he’s only seen a couple dips as bad as this one, but this downturn has been hard because cotton farmers are seeing less government support than before.
McDonald explained that the markets have brought farmers to focus even more on farm credit.
“Anytime you have a dip in prices it leads to lower profitability from the farmers and ranchers so the financing component becomes more critical in their business, often they don’t have quite as much of their own equity and they need to borrow money at those times,” he said.
From weather, to crop prices, to changes in the global market, McDonald explains that agriculture is a risky business, and not everyone is aware of how extreme the risks are.
“When you think about us as a nation I think the population may be growing out of touch a little bit with where their food comes from,” he said.
While farmers wait for more profitable times, McDonald recommends that citizens fight for more farmer-friendly policies.
“We’re about two years away from a new farm bill, so now is the time for people to be speaking out, making sure that the representatives are aware of the impact the prices, the markets and the weather are having on the markets in this area,” he said. “So they can be ready to work on this new farm bill to make sure we can get support programs that are in place that will be helpful and bring stability back.”