092516-farm-ag-economy

Retail establishments surround the McLeansboro square. The small businesses rely partly on the ag economy and local farmers for survival.

Nat Williams, The Southern News Services

McLEANSBORO — Rural economies are feeling the effects of a decline in farm incomes, albeit with a more subtle drop than during the farm crisis of the 1980s.

In rural communities, industries directly and indirectly connected to agriculture are seeing a change in the local economy.

Christopher Bunting, who manages the Illinois Farm Bureau offices in Hamilton and Jefferson counties, has noticed a change.

“Farmers are tightening their belts. Ag lenders are also tightening their belts quite a bit,” Bunting said. “Everybody’s a little more cautious in what they’re spending because of where markets are. Input prices really haven’t reflected commodity prices coming down.

“It’s a double-edged sword.

You’ve got low commodity prices, but then high input costs.”

Mark Epperson, vice president of Peoples National Bank in McLeansboro, agrees.

“Everybody’s had to tighten up,” Epperson said. “For those farmers who would invest more outside of farming or even in a farming- related type of business, that’s something that has lessened. Money spent in our community is less than what it would be otherwise. It’s pretty noticeable. It probably started toward the end of last year, I would say.”

The USDA forecasts net cash farm income at $94.1 billion, and net income at $71.5 billion for 2016, the third consecutive year in which earnings have fallen. That comes after record highs in farm income in 2013.

The projection shows net farm income will decline by 11.5 percent this year. That follows a nearly 13 percent drop in net income for 2015.

“It’s a new challenge. We’ve had experts and analysts telling us we may be starting a new trend of lows,” Bunting said. “We’ve had quite a few years —’07 through ’13-’14 — when we had nice commodity prices. A lot of farmers did improvements on equipment and on grain handling and storage. But now here comes the bottom end of it.”

Not every business in McLeansboro has been touched by the downturn in the ag economy. Jerrod Vaupel, who owns a furniture and appliance store here, hasn’t seen business slow down.

“Actually, 2015 was the best year we’ve had business in our 25 years in business,” he said. “I can’t really say that it’s affecting me.”

Vaupel added any slowing in the local economy may more likely be attributed to problems in two other industries in the county — coal mining and oil.

“I have a lot of customers who are farmers,” he said. “But I don’t see a negative impact on their businesses.”

Bunting hears from many farmers in Hamilton County who are searching for ways to cut expenditures, especially in input costs such as fertilizers. But he believes they will weather the sluggish economy well.

“One of the biggest things about rural America is that people like to shop local and help out local businesses. They’ll do whatever they can to help,” he said. “In the ’80s, you hear the stories about the high interest rates. Thankfully, we don’t have to deal with that now. But it’s still a challenge, the way land prices are.

“You’ve got to have a pretty good handle on your finances and know a good banker. We have that here in our community. We have a couple of good banks that are good with their farm loans and have a good working relationship with farmers. Of course, Farm Credit does too.”

Nat Williams writes for Illinois Farmer Today, a sister Lee Enterprises publication of The Southern.

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