Farmers flush but worried economy not recovering

[September 01, 2011]  DECATUR (AP) -- More than 600 companies set up tents and booths at the annual Farm Progress Show, but a list of the companies that didn't get in gives you an idea of the strength of the country's farm economy.

"We had calls from companies that sell hot tubs, or companies that sell exotic cars, some lawn mower companies," said Matt Jungmann, the show's national manager.

He turned away 40 companies for lack of space at the show that started Wednesday. All wanted a spot because they know the agricultural economy is healthier right now than the economy in general, he said.

Prices for two of the nation's biggest crops, corn and soybeans, have been high for several years because of growing demand overseas and in the U.S. to make ethanol. With corn prices pushing well past a once-unheard-of $7.50 a bushel and soybeans above $14 a bushel, the U.S. Department of Agriculture said this week that it expects farm incomes to rise 31 percent for the year. Land values also have risen.

But don't expect to see farmers shelling out a lot of money for luxury items. They said they learned hard lessons from the 1980s, when many debt-ridden farms went under after land values suddenly plummeted. Most say they are taking advantage of the current good times by paying down debt and growing at manageable rates.

Some are also nervous about the nation's broader economy and what its struggles might eventually mean for them.

"Eight-dollar corn may be good for me today, but it may be more than the economy can afford," Marty Kirbach said as he stood in the sun next to a new combine with a six-figure price tag.

Kirbach farms 2,200 acres of corn and soybeans in the Jerseyville area, about 40 miles north of St. Louis. When he started farming in the late 1970s, he borrowed big -- at interest rates just over 20 percent -- to grow in a hurry, and nearly drove himself out of business a few years later when the price of his land, his biggest asset, dropped sharply.

Now, with the price of land and equipment high, he rents much of what he needs and uses a lot of the extra money he's making to pay off his debt. He says he could be debt-free, almost unheard of for farmers, by the end of the year. And he suspects many of the thousands of farmers at the show this week are doing much the same.

"There's a lot of people that have gotten really healthy here the last five years," he said.

At another booth not far away, a farmer too young to have made it through the '80s said he learned the same lessons through stories from those around him.

Chad Bicker, 29, has raised cattle in Freeport since about 2003 and this year added 72 acres of corn and soybeans. He's grown slowly, he said, with both he and his wife working off-farm jobs.

"I'm very frugal with what I do," he said, adding that his goal is to be a full-time farmer by age 40. "I don't want to have a lot of overhead."

Some farmers are spending money these days, though, making them attractive to farm-equipment makers and some less-traditional companies.

"There's people here from all over the world; they didn't come here on food stamps," Kirbach said, looking around as a sea of farmers and their wives and children walked up and down paved lanes at the trade show that alternates each year between Illinois and Iowa.

That's why Ben Eyster, an all-terrain vehicle dealer for Yamaha, made his first trip to the show this year. Farmers, he said, make up about 40 percent of the business at his shop in Washington, near Peoria.

They opened their wallets wide earlier this year, he said. Eyster's January-to-June sales were up 130 percent over the same period in 2010. But then sales just stopped.

"And what killed it was that government budget fiasco," he said, referring to the summer's squabbles over the federal government's budget. "People lost confidence."

That's the same unease Kirbach talked about. High prices for corn and soybeans helped drive up the cost of food bought by people dealing with tough economic times, he said.

"I'm concerned about the guy that's working at McDonald's," he said. "He works 25 hours a week and has three kids. Where are those people going to be?"

[Associated Press; By DAVID MERCER]

David Mercer can be reached on Twitter at http://twitter.com/DavidMercerAP.

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