Food Market brings news, talk and insight into the food business, from farms to supermarkets to restaurants. Reporters Mike Hughlett and Tom Meersman delve into the work of Minnesota’s food companies and issues such as food safety and labeling.

Commodity price slump packs a punch on ag economy

Posted by: Mike Hughlett Updated: August 22, 2014 - 1:34 PM

You can see it in the announcement Friday of a 460-worker layoff at the Deere & Co. tractor factory in Waterloo, Iowa.

You can see it in the bleak numbers in this month’s “rural main street” report from Creighton University.

Sinking commodity prices are spilling over into the broader economy that’s dependent on agriculture. But with bumper U.S. crops of corn and soybeans, prices have fallen to the point where some farmers stand to lose money.

And commodity prices are expected to move even lower in the months ahead, according to Ernie Goss, an economist at Creighton’s Heider College of Business.

Goss publishes a monthly “Rural Mainstreet Index,” a survey of farmland bank CEOs in 10 states, which takes into account such things as farmland prices and agricultural equipment sales.

The index, released this week for August, hit its lowest level in almost two years: 48.3, down from 51.8 and dipping below the “growth neutral” 50 level. Minnesota fortunately saw its index level rise from 50.5 to 51 in August.

When farmers are looking at dismal crop economics, they postpone buying machinery. The falling demand for agricultural equipment has led Moline, Ill.-based Deere & Co. to announce just over 1,000 layoffs over the past week.

In addition to the 460 jobs to be cut in Waterloo, Deere plans to ax a combined 600 workers at two plants in Illinois; another plant in Iowa; and a Kansas facility.

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